The Pound’s rally came to an abrupt halt following the news that Welsh and Scottish Governments will have a say over the Supreme Court case due in early December. Furthermore, it has been suggested by German Minister Wolfgang Schäuble that the UK continue to pay into the European Union decades after it has officially left.
Whilst these present further headaches for the UK, Pound to Canadian Dollar exchange rates are also trending lower as a result of further OPEC discussions.
Russian officials are ready to limit oil supply
With the fall in oil prices, OPEC nations have been in ongoing discussions in order to limit supply. Unfortunately, not all OPEC members want to play ball, with Iran and Saudi ramping up competition and flooding the markets with cheap oil. This domino affect is being witnessed amongst other members who are less willing to cooperate unless others follow suit.
It’s been suggested by members that Iran cap their production to 3.9 million barrels a day, but have previously sent mixed signals which has offset any agreement.
Oil prices are expecting to post their first weekly gains in 5 weeks.
In the event further discussions lead to a production freeze amongst its members, oil prices could rally which will likely benefit the Canadian Dollar in the months ahead. Given that oil is Canada’s largest export, strong prices correlate to better GDP.
However I remain sceptical around OPEC and their ability to negotiate agreements, there has been many occasions this year when “promises” were made amongst its members when in reality, Iran and Saudi Arabia have both backtracked on their commitments.
I am expecting GBP/CAD to remain on a strong footing unless further Brexit developments unravel, and could move beyond 1.70 in the weeks ahead.