The Pound Canadian Dollar 2017 exchange rate could end up much higher than the lows seen in 2016 depending on how prices of oil and the US Dollar shift. Some analysts perceive a bearish outlook for risky currencies in the coming year, but could oil prices improve enough to keep GBP CAD near its 2016 lows?
Pound (GBP) Remains Weak on Ongoing Brexit Jitters
Demand for the Pound has been poor since last week as lack of fresh supportive factors as well as ongoing concerns that the UK would see a hard Brexit left Sterling widely unappealing.
The latest hard Brexit concerns include last week’s news that any European Union member state could effectively veto any potential post-Brexit trade deal between the UK and EU.
This week’s comments from ex-Bank of England (BoE) Governor Mervyn King championing the idea of a hard Brexit also weakened demand for Sterling. King perceived the EU as ‘unsuccessful’ and believed the UK could see better trade opportunities outside of the single market.
It remains clear that the biggest short to long-term factors in GBP trade will continue to be Brexit concerns. November’s UK house loan results from the BBA also failed to offer Sterling any boost.
Canadian Dollar (CAD) Fluctuates Widely on Ecostats and Oil Prices
The risky Canadian Dollar has seen mixed performance over the last week as both domestic and global factors have failed to give it a steady flow of demand.
Last Friday’s Canadian October Gross Domestic Product (GDP) results were widely disappointing, contracting at -0.3% month-on-month and slowing to 1.5% year-on-year.
Oil prices have also fluctuated, despite oil production falling in OPEC member states as plans to curb production and stimulate prices take effect.
While oil prices strengthened earlier in the week, the commodity was briefly sold off in a bout of profit taking on Wednesday before strengthening again.
These fluctuations in oil prices have left demand for the oil-correlated ‘Loonie’ modest and uninspired, though the currency benefitted on Wednesday from a limited risk rally and a weaker US Dollar.
Pound Canadian Dollar 2017 Exchange Rate Forecast to Fall if Oil Prices Improve as Hoped
A wide amount of factors will come into play for the Pound Canadian Dollar 2017 exchange rate, especially for the Canadian Dollar.
The Pound will continue to be affected by Brexit concerns in the short to long-term, especially any developments in the activation of Article 50 or the likelihood of the UK remaining in the single market.
A wider number of influences will affect the Canadian Dollar however, including of course the success of OPEC’s planned oil output cuts and its effects on demand and oil prices.
There is speculation among analysts that OPEC’s plan alone will not be enough to stimulate oil prices and that more non-OPEC oil producers will also need to cut down on production. If OPEC’s output cap plans do not bolster oil prices in the coming months as hoped, demand for the ‘Loonie’ will plunge.
On the other hand, a successful increase in oil prices would leave the ‘Loonie’ resilient throughout 2017.
This may even help offset the losses from concerns of higher US interest rates and potentially weaker US-Canada trade under the incoming Trump administration.
However this also means that poor oil prices will make the Canadian Dollar even more vulnerable to the US Dollar’s potential strength in 2017.
GBP CAD Interbank Rate
At the time of writing, the Pound Canadian Dollar exchange rate trended in the region of 1.65, while the Canadian Dollar Pound exchange rate traded at around 0.60.
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