The GBP/CAD exchange rate dropped back into the mid 1.60’s having been above the 1.70 level early last week. Following the spike before the Bank of England interest rate decision those buying Canadian Dollars were up around a 4-month high. However, from the moment the decision was announced the negative outlook from the Bank of England caused Sterling to lose over a percent immediately.
Despite the Central Bank providing an immediate positive boost they were quite clear in why there was a hike. They suggested that inflation was an enormous concern for the economy and a rise in the interest rate was seen as a preemptive measure aimed at slowing things down.
Oil barrel price reach 2 year high
Canada’s largest export, oil has risen to a 2 year high taking the level back above $60 a barrel. This has been one of the key factors as to why the GBP/CAD rate fell. Should there be a further rise in the value of a barrel then that would result in profits for the Canadian economy. The deal between all oil producing nations appears to have worked in driving up the price of oil and there is set to be another plan set in place before Christmas.
OPEC and the other oil nations will agree on a figure to limit the amount of oil being produced on a daily basis, meaning the oversupply can be worked down. What this could do is help the level rise up to the $70 level and in turn could provide a boost to CAD. Over the next few weeks I wouldn’t be surprised with Sterling dropping and the CAD potentially jumping to see the rate back down in the low 1.60’s once again. As with many things the value of oil will have a significant effect on the outcome.