The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate recorded gains early in Wednesday’s European trading after crude oil continued to fall.
The Canadian Dollar has lost 3% against the US Dollar (CAD/USD) in 2015 alone, and Wednesday saw the ‘Loonie’ dip below $1.20 Canadian Dollars per ‘Buck’ for the first time since 2009.
Foreign exchange expert Jack Spitz stated: ‘It’s all about crude. A reduction in crude oil prices will stagnate growth in oil producing provinces such as Alberta, Newfoundland and likely Saskatchewan. That hits the Canadian economy and the Canadian Dollar.’
Earlier… The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate continued to record losses on Tuesday, after UK inflation and British Retail Consortium (BRC) sales tumbled.
BRC Like-for-Like Sales posted a -0.4% decline in December on the year–the worst December since 2008 when the global financial crisis was in full swing.
Industry expert David McCorquodale stated that the sales such as ‘Black Friday’ had instigated different spending patterns last year.
McCorquodale stated: ‘This difficult stop/start sales environment has been undoubtedly challenging, but most retailers have managed to achieve a flat but respectable sales performance this Christmas. Time will tell on margins.’
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate began Tuesday’s European session trending lower as economists forecast a fall in the UK Consumer Price Index (CPI).
UK inflation was expected to dip from 1.0% to 0.7% on the year in the month of December; however, the actual figure fell to just 0.5%.
UK inflation is now residing at the weakest level since 2000. Factors contributing to the slide include the recent fall in fuel, electricity and gas prices.
The Office of National Statistics (ONS) stated: ‘The average price per litre has fallen to 116.8p for petrol and 122.9p for diesel. This is 24.8p per litre below the peak average prices for 141.6p and 147.7p per litre for petrol and diesel respectively in April 2012.’
The Pound Sterling to US Dollar (GBP/USD) exchange rate fell by -0.59% shortly after the CPI release.
Meanwhile, the Canadian Dollar has been trending lower against other currency majors as the price of oil continues to weigh on the ‘Loonie’.
The Canadian Dollar to US Dollar (CAD/USD) exchange rate tumbled below 84 US cents and is presently residing at 0.8346.
Canadian Dollar (CAD) Exchange Rate Forecast to Soften as Oil Prices Continue to Tumble
Currency strategist Camilla Sutton stated: ‘We see the core driver for CAD in the near-term as developments with oil prices and expect CAD to reach fresh lows this week. We expect CAD to weaken further and for near term traders are biased to be short CAD.’
As a commodity currency, the Canadian Dollar is extremely sensitive to the price of oil. With the Organisation of the Petroleum Exporting Countries (OPEC) refusing to cut levels of production and the US competing in the market with shale oil, the ‘Loonie’ could continue to suffer the consequences of low oil prices.
Oil prices have fallen by 60% since June 2014 as production levels expand the global surplus.
Industry expert Charles St-Arnaud stated: ‘Commodity currencies have continued to depreciate in recent months in the face of continued declines in commodity prices and the broad-based USD appreciation.’
‘The decline in commodity prices has already had a major negative impact on the terms of trade for commodity producers and will have a negative impact on their economies.’
OPEC have now taken to offering discounts to customers to defend market share, but still refuses to lessen production. US crude hit $44.79 per barrel.
Commodity strategist Ole Hansen commented: ‘The market is in a bit of a panic now and the momentum is really quite negative. We haven’t seen any actions or comments that could reduce this aggressive selling.’
Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Forecast
In a quiet week for both UK and Canadian domestic data, the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is likely to fluctuate on any statements from the Bank of England (BoE) on the recent inflation fall, commodity prices and global developments.
Canadian Existing Home Sales stats are out on Thursday and could cause Canadian Dollar fluctuations.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is trending in the region of 1.8092. The Canadian Dollar to Pound Sterling (CAD/GBP) exchange rate is residing at 0.5533.
