The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate has experienced a fast and bumpy downtrend this week to hit a near year-low amid ever-mounting uncertainty towards Sterling.
Sterling (GBP) Sinks Under a Mountain of Ecopolitical Anxiety
In a week that perhaps demonstrates the Pound’s inability to stay afloat even in a risk-off market, GBP/CAD dropped to an 11-month low of 1.8385 during Thursday’s session.
Having shed a whopping -250 pips since Tuesday’s session and a weekly high of 1.8725, the pair is currently fluctuating in the region of 1.8473 after a small recovery.
Sterling has been weighed down by a number of factors this week, most recently a poll released by ISM that indicates the difference in size between the ‘In’ and ‘Out’ EU Referendum camps has thinned significantly.
As the poll indicates that ‘Leave’ numbers are edging higher, bets that the UK could indeed undergo a ‘Brexit’ in June have soared and left investors increasingly concerned regarding the Pound’s future stability.
This comes after the ‘Panama Papers’ scandal managed to engulf the family of UK Prime Minister David Cameron. Cameron’s late father, Ian Cameron, had allegedly been hiding wealth in offshore ‘tax havens’.
Public outcry and government debates about Cameron’s tax transparency have heated up headlines and put pressure on the Pound.
Britain’s Markit PMI scores, while generally positive, also confirmed suspicions that Q1 2016 saw the slowest growth in the UK’s economy since January 2013.
Canadian Dollar (CAD) Climbs on Commodity Hopes
The ‘Panama Papers’ leak inspired investor uncertainty as it involved the economic elite from around the world. However, while investors initially fled to ‘safe-haven’ currencies and away from risky commodity currencies like the Canadian Dollar, the ‘Loonie’ has managed to regain strength.
The Organization of the Petroleum Exporting Countries (OPEC) are still expected to meet on the 17th of April, and statements released from member countries this week have bolstered hopes that a solution to the current oil price crisis can be reached.
Despite Iran previously saying it would not agree to freeze oil production as the nation enjoys a period of rich export and economic growth, other nations like Russia and Kuwaiti have hinted that they are confident a ‘freeze’ deal can be reached even without Iran.
Oil prices have been plummeting since 2015 due to surplus in the global market and diminished demand for the commodity. As crude oil is Canada’s primary export, the crisis has hit the Canadian economy as well as the strength of the ‘Loonie’.
An agreement of member nations across the world to ‘freeze’ oil production would hike prices and demand for the commodity, helping it return to normalcy.
Pound Sterling to Canadian Dollar Exchange Rate Forecast: Canadian Data Poised to Move GBP/CAD
The immediate future of the GBP/CAD pair is unclear as a number of factors could inspire sudden changes before the end of the week.
Most imminently, Federal Reserve Chairwoman Janet Yellen is set to speak tonight in New York. With minutes from the latest FOMC announcement still fresh in investors’ minds, any hints towards the near future of United States economic changes are likely to influence risk-sentiment in the forex market.
While ongoing ‘Panama Papers’ concerns are likely to dissuade investors from risky currencies like the Canadian Dollar, movement is still likely.
Also due today is Canadian building permit data from February, currently expected to have increased 4.0% from January’s disappointing -9.8%.
Friday afternoon sees a hearty helping of fresh Canadian data, mostly involving employment. This includes March’s key figures for unemployment rates and the change in employment print. The unemployment rate is currently expected to remain around 7.3%, but printing higher could hurt the ‘Loonie’.
Investors are also likely to pay close attention to any comments from OPEC members as April 17th’s important meeting draws closer.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate currently trends around 1.8473 while the Canadian Dollar to Pound Sterling (CAD/GBP) exchange rate trends in the region of 0.5409.