- GBPCAD exchange rates at a 2-week high
- Strong economic data supports Sterling
- Oil prices to remain below $50?
Sterling continues its rally against the Canadian Dollar following positive economic releases. Whilst retail sales have been hugely positive, Moody’s have upgraded their forecasts for the UK next year, offering fresh hope for Britain as it enters a transitional phase with Brexit.
Until government trigger Article 50, Pound Sterling remains sensitive to economic releases coupled with markets waiting for further signals from the newly appointed Prime Minister and the triggering of Article 50, which remains the biggest concern for businesses and investors.
I do however, remain positive about Sterling in the short term, economic releases will take time to soak in the Brexit vote which gives Sterling time to recover some of its recent losses potentially. The announcement of when Article 50 will be invoked could be when Sterling faces its biggest battle, with little known as to when this will be.
When it comes to GBPCAD, another important factor could be driving exchange rates in the months ahead.
Oil prices to remain low for some time
Over supply and a lifting of sanctions in the likes of Iran, coupled with negated oil supply disruptions in Nigeria, Iraq and Libya pose concerns for the future of oil prices. Goldman Sachs have predicted that oil prices could remain below $50 until later next year.
CAD is linked closely to the price of oil given the Canadian economy and its reliance on its oil exports, we could therefore see further weakness for CAD in the mid term.
If current conditions continue, it’s plausible exchange rates could move closer to the 1.75 mark within the next month, as long as Article 50 remains on the backburner.