A lack of sterling appetite caused the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate to edge lower during last week, ending Friday 2.5pct lower compared to opening levels.
At the time of writing, the pound to Canadian dollar exchange rate has slipped 0.2 per cent to trade around 1.71206.
GBP/CAD fluctuated a little more flatly on Monday afternoon, as the morning’s increase in oil prices faded and markets became more anxious about whether or not the week’s oil production meeting would have any effect.
Sterling remained relatively weak due to Brexit concerns, but the ‘Loonie’ was also undermined by lower demand for risk-correlated currencies.
Brent crude oil prices have been trending higher ahead of the meeting of oil producers in Algeria, even though investors remain sceptical that any meaningful deal is likely at this point.
If confidence in the prospect of a production freeze begins to falter again over the coming days then the GBP/CAD exchange rate is likely to recover more of its recent losses.
Economic data was fairly mixed last week, with house prices showing resilience and borrowing figures revealing the huge deficit expected, yet the pound to Canadian dollar exchange rate was consistently on the decline.
Speculation over the odds of an interest rate freeze from the US Federal Reserve kept the US Dollar exchange rate weak, allowing the Canadian Dollar to rise.
Meanwhile, continued rumours that the Organization for the Petroleum Exporting Countries (OPEC) may freeze production soon pushed crude oil higher, helping CAD exchange rates to advance.
Latest Pound/Canadian Dollar Exchange Rates
On Saturday the Pound to British Pound exchange rate (GBP/GBP) converts at 1
The GBP to GBP exchange rate converts at 1 today.
The GBP to USD exchange rate converts at 1.237 today.
NB: the forex rates mentioned above, revised as of 20th Apr 2024, are inter-bank prices that will require a margin from your bank. Foreign exchange brokers can save up to 5% on international payments in comparison to the banks.
Coming UK data is largely housing-themed, with Pound Sterling (GBP) exchange rates likely responding to changes in the outlook of a vulnerable sector of the economy.
Monday’s BBA loans for house purchase figure, Wednesday’s Nationwide house prices report and Thursday’s mortgage approvals data will help investors better gauge the strength of the property market.
This could help to strengthen the Pound if the outlook remains resilient, although overall, BNP Paribas expects the Pound to continue weakening, in part because;
‘Stronger than expected UK data over the past month and a squeeze of short GBP positions have, according BNP Paribas STEER, driven the GBP above … its fair value implied by rates and equity markets – short-term fair value currently stands at 1.2890.’
In terms of data, next week is again very sparse, although Friday promises volatile CAD exchange rate movement thanks to scheduled GDP figures.
Today and next Friday are the key days for Canadian data, with consumer prices today expected to creep higher, while there are no forecasts for next week’s July GDP results.
The interim days are quiet, with a lecture by the Bank of Canada (BOC) Governor Stephen Poloz on Tuesday and Thursday’s CFIB business barometer the only things to interest traders.
However, that is not to say that the coming week will be a quiet one for the Canadian Dollar, with a key meeting from the Organization for the Petroleum Exporting Countries (OPEC) in focus.
Will OPEC Boost Canadian Dollar (CAD) Exchange Rates with Oil Production Freeze?
Markets may be weary of rumours that OPEC intends to control oil prices by collectively freezing or cutting production, given the amount of times they have been disappointed in the past, yet hopes are still high ahead of next week’s meeting.
The cartel will be holding an informal meeting in Algeria on the peripheries of an oil conference, in which they will discuss whether to work together to curb oil production in order to boost weak market prices.
According to respected oil expert Helima Croft of RBC Capital Markets, this meeting could succeed where others have failed;
‘Since the failed meeting in Doha, much has changed. Iran is now on the cusp of producing at pre-sanctions levels. Senior Saudi officials have seemed more supportive of bringing back market management measures; and depending on the framework, it could work for Libya and Nigeria, who each have large portion of production shut-in for security reasons.’