GBP/CAD Dips on Light Canadian Data
Still up around 0.4%, the Pound’s lead against the Canadian Dollar has reduced throughout the day on a lack of positive UK data and Canadian security investment data printing positively.
February’s foreign investment in Canadian securities report showed a jump to 15.94b from January’s 11.41b, while the print for Canada’s investment in foreign securities came in at 4.37b, completely leaving contraction from the previous score of -14.68b.
Still weakened from the latest blow dealt by the oil crisis, the ‘Loonie’ regained a little strength from the good data.
Earlier…
- ‘Brexit’ Weighs on Pound (GBP) Again – Chancellor George Osborne has new warnings
- UK House Price Growth Slowed – Rightmove house price reports down from March
- Oil Price Crisis Worsens – OPEC members unable to agree at Doha summit
- Forecast: Will Pound Rally Continue? – Or will domestic UK worries flatten GBP?
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate appears to be recovering from its 15-month low after Sunday’s highly anticipated Organization of the Petroleum Exporting Countries (OPEC) meeting proved disappointing and oil price fears hurt the commodity-sensitive Canadian Dollar.
After hitting 1.8123, its lowest point since January 2015, last Friday, the GBP/CAD pair began climbing as investors became concerned that the 17th of April OPEC meeting may disappoint.
They were right; GBP/CAD leapt right to 1.8435 as markets reopened for the week, but the pair has since settled closer to 1.8300 – still up around 0.5%.
Pound (GBP) Strength Diminished by Chancellor Osborne’s ‘Brexit’ Warnings
Despite bearish news hitting the Canadian economy and knocking the Canadian Dollar down, any potential Sterling rallies have been seemingly softened by a new series of warnings from UK government officials throughout the weekend.
This included Chancellor of the Exchequer George Osborne, who has made extensive comments about the potential economic fallout following a ‘Brexit’.
Osborne has described a post-‘Brexit’ Britain as ‘permanently poorer’.
“Britain would be permanently poorer if we left the EU. Under any alternative we’d trade less, we’d do less business, there would be less investment and the price would be paid by British families.”
Osborne’s intervention came the day after French Economy Minister Emmanuel Macron told Britain that outside the EU it would be “completely killed” in trade talks with countries such as China, and less than a week before US President Barack Obama is due to visit the UK and offer his own warning against leaving.
Osborne argued that UK GDP would fall a huge 6% by 2030 if it left the EU. This follows his Friday prediction that mortgage prices would soar immediately following a ‘Brexit’.
UK data has also been disappointing, with Rightmove’s house price report for April slowing to 7.3% from 7.6%.
Canadian Dollar (CAD) Plummets after OPEC Meeting Failure
All the ‘Brexit’ negativity weighing on the Pound has been unable to outmatch the sheer disappointment felt by global markets after an oil production ‘freeze’ agreement was not reached during the weekend’s OPEC summit in Doha.
Since the meeting between members and non-members of the Organization of the Petroleum Exporting Countries (OPEC) was first announced in March, analysts and investors began to bet that a solution to the struggling price of the commodity would be found.
However, the organization’s ability has been undermined as the April 17th meeting was unable to agree to an oil output cap, an agreement that could have stimulated demand and prices for Canada’s most lucrative export – which has experienced price struggles since 2015.
Some major players in oil production were absent from the meeting, including Iran and Canada itself.
According to the BBC, Qatar’s energy minister, Mohammed bin Saleh al-Sada eventually announced that oil producers needed more time as the meeting drew to a close.
This is possibly in reference to Iran, who has only recently been allowed to produce unlimited quantities of oil and as a result does not intend to agree to a freeze. Saleh al-Sada stated after the meeting that an agreement would be less effective if major producers did not take part, mentioning that OPEC respected Iran’s position.
Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Forecast: Pound Could Strengthen Further
While the Canadian Dollar has briefly collected itself after a massive GBP/CAD leap earlier this morning, CAD’s recovery appears limited and the pair’s rally may even continue as oil price concerns sink in.
The weekend’s OPEC news implies that not only has an agreement not been met, but that one is unlikely to be made in the foreseeable future – something that will weigh on the Canadian Dollar considerably going forward.
The Pound, on the other hand, has already weathered a long series of ‘Brexit’ related hits, with the majority of investors now aware of ‘Brexit’ warnings and potential economic issues for Sterling going forward.
As a result, some analysts predict GBP will not lose much more ground than it already has done, a prediction that could allow the Pound to hold its ground and potentially rebound from profit taking.
The data horizon is light, with nothing hitting until the UK’s employment data on Wednesday.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate currently trends around 1.8300 while the Canadian Dollar to Pound Sterling (CAD/GBP) exchange rate trends in the region of 0.5459.
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