The Pound to Canadian Dollar (GBP/CAD) exchange rate struck a new four-week high at the start of this week’s session as markets speculated on the possibility of further OPEC led oil production cuts.
Canadian Dollar Exchange Rates Weakened Ahead of key OPEC Meeting
After tumbling at the tail end of last week as Canadian retail sales failed to recover as expected in September, the Canadian Dollar remains trending lower in the first half of this week as investors await of Thursday’s OPEC meeting.
This week’s meeting is seen as particularly important because OPEC members will be deciding whether to extend crude production caps past March 2018.
However, oil prices are dipping ahead of the meeting as analysts speculate that some members may be reluctant to continue with the current pace of cuts.
A lot of focus is also being placed on Russia. While not an official OPEC member, its compliance with the cuts is key and some believe the nation won’t be anxious for an extension.
With oil products accounting for roughly 15% of Canada’s exports, the price of oil has a major impact on the perceived value of the Canadian Dollar.
GBP Reacts to BoE Stress Test Results
Investors have generally taken today’s report in good spirit as it suggested that every major UK bank had passed its stress test for the first time since the financial crisis.
The BoE suggested that the UK’s financial institutions would be able to handle a ‘disorderly’ Brexit, with BoE Governor Mark Carney also stating that they would be able to weather the storm in the event of a ‘no-deal’ Brexit.
However, Carney added that such an outcome would still be ‘painful’ for the UK economy, with the report warning that more needs to be done to reduce the risks posed by Brexit.
Data Affecting This Week’s GBP/CAD Forecast
28th November 15:39 CA BoC Financial System Review
29th November 09:30 UK Mortage Approvals (Oct)
30th November 00:05 UK Consumer Confidence (Nov)
1st December 09:30 UK Manufacturing PMI (Nov)
1st December 13:30 CA Unemployment Rate (Nov)
1st December 13:30 CA GDP (Q3)
GBP CAD Exchange Rate Outlook: Brexit Concerns to Overshadow Data?
Looking ahead, the GBP CAD exchange rate may relinquish some of its recent gains over the next couple of days as economists forecast that UK economic data will prove to be largely downbeat.
However, even some unexpectedly positive data could still be overlooked by investors this week as markets remain focused on the state of Brexit negotiations, with investors fearing that the start of trade talks next month could be delayed.
Meanwhile, the Bank of Canada (BoC) will publish its own Financial System Review later on Tuesday and markets will be keen to learn more about what impact the central bank’s two rate hikes may have had on the Canadian economy and how they will impact future monetary policy.
The Canadian Dollar may also be able to recoup some of its losses in the latter half of the week if the nation’s unemployment rate fall as expected in November.