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Markets Fear Long-Term Oil Price Slump, British Pound to Canadian Dollar Exchange Rate Fluctuates

Published: 26 Jan at 1 PM Tags: Pound Sterling, Dollar Exchange Rate, Currency Exchange, Canadian Dollar Exchange Rate, UK, Exchange Rates,

The Pound to Canadian Dollar has fluctuated relatively close to the week’s opening levels this week as the Canadian Dollar shifts between bullish and bearish on widespread oil price uncertainty.

GBP/CAD began this week trending at around 1.6487 and has since hit a high of 1.6616 and a low of 1.6424 without sustaining any of these shifts.

Pound (GBP) Sturdy on Hopes of New UK Trade Ties

The Pound has held its ground well this week against the Canadian Dollar’s fluctuations due to market hopes that the UK will be able to make strong trade deals following the Brexit after all.

On Wednesday, it was confirmed by UK Prime Minister Theresa May that a Brexit ‘white paper’ would be published to help MPs with the vote to move Article 50 through Parliament.

This bolstered hopes that economists would be offered more clarity on what exactly the Brexit process will look like.

Markets were further excited in the late-week by news that Theresa May would be the first world leader to meet with new US President Donald Trump. Traders were especially excited that this indicated the UK would be a priority in US trade.

Canadian Dollar (CAD) Fluctuates on Mixed Oil Outlooks

Shifting demand for the Canadian Dollar is the main reason for GBP/CAD’s wide fluctuations in the past week, with the Pound’s strength largely consistent in comparison.

The Canadian Dollar previously benefitted from news that US-Canada trade would likely remain strong under US President Donald Trump, but has since weakened due to concerns that the oil market would not see the recovery markets had hoped for.
While prices of Canada’s most lucrative commodity improved on Thursday due to weakness in the US Dollar, US oil stocks remained high despite plans from OPEC and other oil producers to cut oil production.

With oil supplies remaining higher than demand and OPEC’s plans not yet making an effect, <a title="If BP is right, the oil price may never again hit $100” target="_blank" href="">some analysts</a> and investors have grown concerned that the commodity would never reach levels above $100 again.

GBP/CAD Forecast: Pound Could Sustain Advances if Oil Concern Remains

On Thursday the Pound to Canadian Dollar exchange rate trended above the week’s opening levels despite multiple dips lower. However, if markets remain concerned about long-term oil price movements GBP/CAD will comfortably sustain some gains this week.

Friday’s session will not see the publication of any fresh UK or Canadian data, leaving markets to speculate and anticipate upcoming talks and details on trade shifts.

Particularly in focus for GBP traders will be this weekend’s meeting between US President Trump and UK Prime Minister Theresa May. Markets will be hoping for an optimistic outcome and for bets of stronger UK-US trade ties following the Brexit.

As for the Canadian Dollar, movement in oil markets will continue to be vital to CAD movement in the coming days and week.

With investors now less worried about the future of US-Canada trade, increased signs that the US will re-enter the oil market and lower prices of the commodity even further could weigh on CAD.

In terms of data, next week will see the publication of Canada’s November monthly GDP figures and later in the week the <a title="BoE" target="_blank" href="">Bank of England (BoE)</a> will hold its first meeting of 2017.