The GBP/CAD exchange rate is advancing today with traders looking ahead to 2016. While Pound Sterling (GBP) may be facing several headwinds that are likely to drag the exchange rate down over the course of the year, the Canadian Dollar (CAD) will come under more significant pressure in the coming months.
GBP/CAD Exchange Rate Trending Up After Positive Long-Term Forecast for UK Economy
A recent report by the Centre for Economics Business and Research (Cebr) claims that the UK economy will become the best performing in the Western world. The report predicts that the UK will rise to become the 4th largest economy in terms of Gross Domestic Product, with a total GDP of US$4.7 trillion, up from the current US$3.04 trillion. By 2034 the UK will have dropped down the list again, however, although it will remain within the exclusive G8 group of the world’s richest countries.
This has likely cheered investors after the unexpected dip in the final third-quarter UK GDP forecast.
The GBP/CAD exchange rate is currently trending in the region of 2.0572.
CAD/GBP Exchange Rate Forecast: Tough Year Ahead as Oil Price Plummet Predicted to Continue
The Canadian Dollar has had a tough 2015 thanks to the global oil oversupply, which has pushed prices down below the key US$40 per barrel mark. The supply glut is partly because of the Organization of Petroleum Exporting Countries (OPEC) deliberately overproducing. It is claimed that Saudi Arabia was attempting to force American oil producers out of the market by driving prices below a sustainable level. With vast reserves in its treasury, Saudi Arabia is well equipped to weather the storm of plummeting prices, although the Kingdom has just had to cut fuel subsidies in response to a record budget deficit.
With export sanctions due to be lifted from Iran in 2016, the chances are that the global oil supply will continue to increase, pushing prices even lower. Goldman Sachs have even predicted that crude may fall as low as US$20 per barrel. The falling prices are likely to continue for the first half of the year, which will reduce the amount of investment companies funnel into their operations. As this begins to cut production, oil supply will tighten, with analysts predicting that the second half of the year could see crude rise above US$50 per barrel.
The CAD/GBP exchange rate is currently trending between 0.4846 and 0.4861.
GBP/CAD Exchange Rate Forecast: UK and Canadian Manufacturing PMIs Kick Off 2016 Data
After a sparse few days of data, Monday sees the release of several UK figures and statistics, including the Markit/CIPS Manufacturing PMI, with the RBC Manufacturing PMI for Canada coming later during the London session. Both PMIs are expected to show a slight slowdown in the sector and with the rest of the UK data also predicted to print marginally down on previous releases, the Canadian Dollar could have an opportunity to take some early ground against Pound Sterling.
The GBP/CAD exchange rate is currently trending between 2.0546 and 2.0619.
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