Sterling jumped against most currencies today and the GBP/CAD exchange rate was no exception. The GBP/CAD rate has now moved to a 4 month high with the 1.70 level being broken for the first time since the beginning of June.
The Canadian Dollar has been one of the best performing currencies of late and this can be mainly attributed to two things. The first major factor has been the demise of Sterling which has primarily come from the Brexit fallout over the last year. Furthermore, economic conditions from the perspective of Canada have been improving with the Central Bank in Canada one of the only nations of late to raise interest rates. Whilst there isn’t expected to be any further hikes in the immediate future there is likely to be a tightening of policy once we move further into 2018. Should this be the case the Canadian Dollar could start to strengthen once more.
The other major factor for the CAD’s strength is the price of a barrel of oil. The cost has moved above $60 a barrel which is the first time in 2 years. OPEC and the oil producing nations across the world have been making sure production is controlled, slowing the current levels. At the start of last year there was a lack of control over the production with several nations producing barrels at such a rate that the cost of oil plummeted, but this has now stopped. This has helped the Canadian Dollar to profit as Canada’s main export is Oil.
Should Sterling continue to prosper from progressive talks regarding Brexit and the potential for a interest rate hike from the Bank of England on Thursday, then we could see more movement for the GBP/CAD exchange rate. By the end of this week there could be a movement up towards the 1.75 levels if things go Sterling’s way.