The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate has trended between 1.9888 and 2.0347 over the past seven days.
‘Brexit’ Hangs Over GBP/CAD Exchange Rate
The upcoming EU membership referendum continues to keep demand for Pound Sterling cool. David Cameron has been trying to negotiate a new deal with senior EU officials, including European Council President Donald Tusk. David Cameron wants to hold the membership referendum on the 23rd of June, so he needs to secure a deal soon in order to be able to meet his deadline. The next EU meeting takes place in Brussel’s on the 18th – 19th of February. Donald Tusk has today submitted a deal outline to EU leaders, although it includes a slowdown in benefits for in-work migrants over four years, rather than a total ban as Cameron initially wanted.
Pound Sterling has made steady gains since the weekend, although GBP/CAD has only just recovered the losses made by Friday’s slump. While the British asset is currently weak, the Canadian Dollar is weaker as oil once again begins to fall. Brent Crude rose to nearly US$35 per barrel; its highest level since the beginning of the year. Many are already forecasting a drop back below US$30 per barrel.
Canadian Dollar Softened as Oil Production Cut Hopes Fade
Just as the ‘Brexit’ has been weighing heavily on Pound Sterling, the global oil glut continues to drag on ‘Loonie’ exchange rates. The slump in oil – and by extension the Canadian Dollar – has been brought about in part by dwindling hopes that oil-producing nations would agree to cut production. The markets are being flooded by a million more barrels of oil each day than there is a demand for, so signs that several producers including Russia and Saudi Arabia were ready to talk about cutting production triggered the current short-lived rebound. Spokespeople have since tried to downplay the idea, however, dashing trader hopes.
The price of oil is hitting Britain as well, with BP today announcing a massive fall in profits; bigger even than the drop predicted by analysts. The company is axing 7,000 jobs as earnings in the final quarter of 2015 tumbled from £1.52 billion to £514 million. BP expects its total profits for 2015 to be around half what they were the previous year.
Pound Sterling and Canadian Dollar Forecast: Interest Rate Decisions and Unemployment Figures Ahead
It is a quiet data week for Canada until Friday, when several important sets of figures will be released. Key among them are the Unemployment Rate, which is expected to hold level at 7.1%, while the Net Change In Employment is predicted to have slowed from 22.8k to 6.5k. The UK sees Markit Service and Composite PMIs due out on Wednesday, which are expected to show a minor slowdown, but could print worse if they follow the same pattern as today’s Construction PMI. The Bank of England releases its Inflation Report on Thursday along with its next interest rate decision.
Heads Up
Summary of major upcoming data releases that we think may move the market.