The Canadian Dollar continues to hold on to the gains it’s made in the last few weeks against Sterling. This is despite the price of oil sitting dubiously as it looks likely to return to the 30’s in the next few weeks.
The oversupply problems seen at the start of the year could be about to get significantly worse as OPEC threatens to run a maximum capacity production program. Saudi Arabia along with other nations in the region have not kept it a secret that they are planning to price some of the more expensive productions out the market.
Should the price of oil continue to drop it will have a major effect on the Canadian Dollar. Canada’s main export is oil and therefore the money generated from selling the product is currently low, especially compared to years gone by when the cost of a barrel was $100 more expensive.
NIESR GDP estimates could weaken rates further
GBP/CAD rate will be affected by the National Institute of Economic and Social Research GDP estimation today. At 3pm the first GDP data post Brexit will reveal the initial extent from the Referendum. The 2nd Quarter this year showed growth in the UK and it seems unlikely in my opinion that it will continue after the vote. The business sentiment data since the vote has been fairly poor so I would not be surprised if this continued through to GDP.
If the data released today is poor I would not be surprised to see the GBP/CAD rate drop below the 1.70 mark. The rate fell under 1.70 for the first time in three years after the Referendum and a movement back towards that direction should be seen as a very good selling window. I personally believe that Sterling’s troubles could be near the bottom and whilst there may not be much short term strength, I don’t believe there will be too greater further losses