The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate firmed on Monday as hopes that a deal will be reached with Iran on its nuclear programme sent oil prices falling.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate touched a session high of 1.8913
Falling oil prices have put significant pressure on the ‘Loonie’ over the past few months, as the commodity is one of Canada’s most exported items. Last week the currency slumped to a new six-year low against its US counterpart and has made a 13% decline since last year. More price falls are expected as the USA continues to report a glut in supplies. OPEC members also continue to show no sign of slowing oil production. Despite cutbacks in some sectors of its oil industry, Canadian production is also rising.
There had been hopes that oil prices would stabilise in the $50 per barrel region but some analysts are predicting even more price declines.
‘I think we’re heading towards the low 40’s, maybe even high 30’s before this is all said and done,’ said John Stephenson, president and CEO of Stephenson & Co. Capital Management.
Prices fell on Monday as analysts raised their bets that sanctions could be eased against Iran, raising the prospect that Iranian oil could begin to enter an already oversupplies market. Western powers are hoping that Tehran will offer concessions, which could result in a deal over Iran’s nuclear ambitions. Tehran claims that it would only use nuclear for peaceful purposes such as energy, but the West is concerned the nation could use it for weapons.
Oil prices are also under pressure from the strong ‘Greenback’, which remains close to multi-year highs against a basket of currencies. The Fed’s policy-setting committee meets this week with the expectation that it could tighten monetary policy as soon as June.
Pound Sterling (GBP) Forecast to be quiet until midweek
The Pound Sterling is expected to trade in a tight range throughout the session due to a lack of market moving data releases from the UK. Tuesday promises to be a quiet session. The main event for Sterling will occur on Wednesday, due to the release of the latest unemployment data and the Bank of England’s policy meeting minutes for March.
Economists will also be focused on Wednesday’s US Federal Reserve policy meeting. Any signs that policy makers are edging closer to hiking rates and the ‘Loonie’ and other commodity-based assets will weaken.
