The Pound Canadian Dollar exchange rate plunged on Wednesday after holding its ground earlier in the week. While prices of oil have fluctuated and could continue to do so, the Pound has once again been undermined by Brexit worries taking GBP CAD down to a weekly low of 1.67.
Pound (GBP) Weakened by Brexit Fears and Poor Ecostats
The Pound Canadian Dollar exchange rate began the week with mixed movement, as it continued to benefit from hopes of a softer Brexit while also being sold on Supreme Court jitters.
This week has seen the UK government appeal to the Supreme Court over the High Court’s decision that Article 50 must be activated through Parliament rather than independently through the government.
Additional concern for the Brexit outlook was thrown onto the GBP fire on Wednesday, when UK Prime Minister Theresa May appeared to U-turn on her intentions to keep the government’s Brexit plans hidden until Article 50 had been activated.
She indicated she would reveal the government’s plans – but only if MPs voted beforehand that they would agree to her proposed timeline for triggering Article 50.
This, as well as news that UK industrial production contracted at a surprisingly poor -1.1% year-on-year in October weighed down the Pound on Wednesday.
Canadian Dollar (CAD) Mixed as Oil Prices Fluctuate
Canada’s most lucrative commodity – crude oil – saw a significant surge last week after OPEC member states agreed to a historic oil production output freeze, with the intention of stimulating demand and prices for the commodity.
However, oil prices slipped this week as oil producing nations ramped up production until the proposed start date for the deal.
This not only increased fears that the oil glut would worsen before it improves, but also flared up speculation that OPEC’s deal may not actually make a big difference to long-term oil prices.
As a result, the oil-correlated Canadian Dollar has seen limited performance this week, though as oil price falls have been soft the ‘Loonie’ has held its ground against the falling Pound.
Pound Canadian Dollar Long-Term Forecast: Traders to Face Brexit Reality
For the months since the Brexit, some investors have held onto hopes that the UK would somehow avoid the Brexit or that the process would be delayed indefinitely.
However, news over recent weeks has made it increasingly evident that, even if MPs are given a vote over Article 50 and Brexit negotiations, the leaving process is likely to begin in early-2017 as UK Prime Minister Theresa May had planned.
Any lingering hopes in markets that the Brexit could be avoided are likely to be put out in the coming weeks and months; which could weigh on Pound demand.
However, as most traders already expect this, news about whether or not the UK will be able to maintain access to the single market is likely to be more influential to GBP movement.
If the UK government continues to indicate it will fight for post-Brexit single market access, the Pound could hold its ground.
Meanwhile, if markets fail to see a steady and definite correlation between OPEC’s output cap and oil prices, the Canadian Dollar could see a long-term downward trend.
Interbank Pound Canadian Dollar Exchange Rate
At the time of writing, the Pound Canadian Dollar exchange rate trended in the region of 1.67, while the Canadian Dollar Pound exchange rate traded at around 0.59.
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