Near-Term Forecast Negative for Pound to Canadian Dollar Exchange Rate (GBP CAD)

April 27, 2015 - Written by John Cameron

STORY LINK Near-Term Forecast Negative for Pound to Canadian Dollar Exchange Rate (GBP CAD)

The Canadian Dollar (currency:CAD) has surprised investors by outperforming all of the other sixteen major global currencies so far today. The Loonie was assisted by a renewed push higher for the price of a barrel of Crude Oil on the wholesale markets. Brent Crude reached a 4 ½ month high of $65.24 a short time ago as investors expressed their concerns at the potential disruption in supplies from the all-important Middle Eastern region. The ongoing conflict in Yemen has been the main contributory factor to these concerns – Yemen overlooks a key routing point for tankers delivering oil out of the Middle East via the Gulf of Aden and the potential for a complete breakdown of the troubled nation into a state of all-out lawlessness is likely to continue to propel the price of ‘Black Gold’ higher still.

The Canadian economy remains heavily dependent on the export of its plentiful reserves of crude oil to world markets, so the news came as a bonus for the Loonie. The Pound sterling Canadian Dollar exchange rate stood at 1.8497 GBP CAD when the international currency market re-opened for business last night after its weekend market shutdown. However, a short time ago, the pair was changing hands at below the 1.8370 threshold. The next stop heading Southwards for GBP CAD, if this short-term downtrend continues, comes at its 3-month low of 1.8149, which it touched off 10 days ago. Analysts forecast that consecutive closes below this threshold would send out a strongly negative signal for the pair and would open the door for a move downwards towards its 15-month floor at 1.7536.

The pair’s fortunes remain inextricably linked to the price of crude oil. Michael Hewson of CMC Markets stated a short time ago that, ‘overall we are in an upwards trend and we do appear to have found a short-term base’. He went on to assert that, ‘there's a good chance we could see $70 a barrel over the course of the next month or so.’ If his prophesy comes to pass, then the near-term outlook for the GBP CAD exchange rate becomes extremely negative.

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TAGS: Canadian Dollar Forecasts Currency Predictions Pound Canad Forecasts