GBPCAD could be one of the few currencies to strengthen following the Brexit vote, caused in most part by the falling price of the barrel of oil. OPEC met today with 14 of its oil producing nations to discuss a production freeze in attempt to stabilise the price of oil.
OPEC have tried on many occasions to make ends meet but have failed to negotiate a reasonably agreement amongst its oil producing members. Saudi Arabia have offered to reduce its numbers if rival Iran agrees, which looks unlikely given their recent sanction relief.
Russia is on course for pumping 11.1 million barrels of oil a day into the market, compared with 10.7 million barrels recorded in August. They are not looking to freeze production but simply implement a ‘cap’ on existing numbers. There does not appear to be any signs that OPEC are able to agree a production freeze at today’s meeting.
But even if nations are able to agree on a production freeze, its likely discussions will continue with a final decision likely in the months ahead. This leaves the price of oil at the lower end for some time, which will cripple the Canadian Dollar as we approach 2017.
Sterling likely to continue its advances against CAD
GBPCAD remains above 1.70 and has gained 3.5 cents since the lows of this week, with the price of oil likely to remain low, the implications for the Canadian economy could be significant. Whilst it is unlikely that GBPCAD exchange rates will return to its pre-Brexit levels anytime soon, further advances towards 1.75 possibly 1.80 are plausible.
If you have Canadian Dollars to sell, you may wish to look at doing so sooner rather than later. The strength of the Canadian Dollar is closely linked to the price of oil and could spell further gains for Sterling against the Loonie.