At the opening of the week, the Pound gained on an underperforming Canadian Dollar.
Although Sterling is feeling the pressure of the continuing EU Referendum debate, the value of the ‘Loonie’ has remained at the mercy of the unabated Alberta wildfires.
UK Referendum Talks Inspire GBP Fluctuations
While the Pound is currently appreciating against the Canadian Dollar, GBP/CAD had previously struggled as a result of comments from PM David Cameron.
In what may have been his starkest warning regarding the EU Referendum campaign so far, Cameron explicitly identified wars that the UK had helped to resolve as part of a more cohesive Europe, such as the Napoleonic and First and Second World Wars, before implying that if ‘Brexit’ occurred, the then-separate UK and EU would both be at greater risk of internal and external threats to peace and security.
‘Out’ campaigners were fairly dismissive of the predictions; MP Steve Baker stated: ‘This morning the PM spoke of war, death – no doubt pestilence and famine will follow shortly behind.’
Canadian Dollar Flops as Wildfires Disrupt Oil Transport
In the absence of Canadian economic data, the ‘Loonie’ has still been soft against its peers, largely on account of the still-burning wildfires in the western province of Alberta.
Although remote in a relative sense, the expanding fires are nonetheless burning in the area of the third-largest oil reserves in the world. Subsequently pipelines out of oil producing companies have been either shut off or limited in their output, which has in turn harmed the local and national economy.
As the fires could continue burning for months and repair efforts are likely to cost millions, the situation left the ‘Loonie’ struggling.
GBP, CAD Exchange Rate Forecast
For the rest of the week, Pound Sterling/Canadian Dollar exchange rate movement may occur as a result of UK data contributions, including tomorrow’s trade balance stats for March, Wednesday’s production printings and GDP estimate and Thursday’s Bank of England (BoE) interest rate decision/inflation report.
Canada’s input will be more limited, with Wednesday bringing a Bank of Canada (BOC) speech and Thursday seeing the announcement of the March new housing price indices.
Forecasts have been for a general decline in the UK’s trade deficit, a monthly rise but annual fall in production, a BoE interest rate freeze and respective gains and declines in annual and monthly Canadian housing indexes.
Heads Up
Summary of major upcoming data releases that we think may move the market.