The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate took a tumble in Tuesday’s European session as the UK general election placed fear in the heart of investors, despite ‘Loonie’ softness as result of a drop in oil prices to $43 per barrel—a six-year low.
The price of oil has dominated much of the Canadian Dollar’s movement in recent months as crude is Canada’s largest export; however, many economists had forecast a recovery in black gold prices. So which way is oil headed—up or down?
OPEC Decisions Pressure Oil Lower, Canadian Dollar (CAD) Exchange Rate Softer
The Organisation of Petroleum Exporting Countries (OPEC) has refused to cut oil production despite falling prices as it believes that demand will increase, putting an end to the global glut and weaker prices.
Advisor to Saudi Oil Minister Ali Al-Naimi, Al-Muhanna, commented: ‘I am confident that demand is and will be stronger. Supply will remain healthy, and the price will firm up.’
Inflation the world over is tumbling and many central banks have loosened monetary policy as a result of a global slowdown and weaker consumer prices. Moreover, economies such as Russia are feeling devastating effects of lower oil values.
However, some experts have forecast that OPEC and Russia will be decreasing production in June when the next OPEC meeting is held.
Industry expert Jason Whitely commented: ‘You’ve had a pullback in US and Canada in terms of rigs dropping, capital expenditures falling, budgets falling. We’ve done our part, now it’s time for the centrally controlled economies of Russia and Saudi Arabia to do their part… But Saudi wants to communicate that it’s not just them, that it’s a coalition cut.’
A cut in production could see the price of oil increase by around 40% before the close of 2015 according to some experts.
Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Forecast
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate could be in for hefty fluctuations on Wednesday with the release of the Bank of England (BoE) meeting minutes as well as labour market data.
The UK Unemployment Rate, Average Weekly Earnings and Employment Change figures will also be published on Wednesday and could be a major source of GBP/CAD exchange rate movement.
Meanwhile, Friday will be a major day for the ‘Loonie’ with the Bank of Canada (BOC) Consumer Price Index released.
The Canadian Dollar to Pound Sterling (CAD/GBP) exchange rate is trading at 0.5303.The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is trending in the region of 1.8874.
