Will GBPCAD levels remain above 1.70?

There is a growing concern for the outlook on the pound to Canadian dollar exchange rate as the market struggles to price in a number of concerns relating to Trade Wars and the global economic outlook. Expectations are for an increasingly volatile period as investors try to second guess the future direction on both Brexit and these trade disputes.

Another global factor has been the price of oil which has fallen to below $70 a barrel on news that there has been a large increase in crude oil inventories, ie there has been a large increase in global supply. Since Canada is a major oil player, we have seen some weakness from the Canadian dollar as investors brace themselves for further falls.

Whilst the Bank of Canada has been looking to raise interest rates, markets are fearful over whether they will be backed into a corner and like their US counterparts, appear likely to scale back future rate hike plans. A major factor in all of this will of course be the current trade spats which will only increase global tension and uncertainty.

Sterling rates are also choppy with no real progress being made on Brexit. The market is fearful over future plans, it might be that we now see all the timelines extended and we have to wait until the end of the year or even the New Year to really understand just what Brexit means.

Sterling to GBPCAD levels have moved above 1.70 but they might not last there for too long. Clients with a position buying or selling the pound and Canadian dollar would do well to take full stock of all of their options and make sure they are fully up to date with the latest market news.

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