GBP CAD Exchange Rate Volatile as Britain Faces ?Decade of Disruption?

December 29, 2016 - Written by Ben Hughes

STORY LINK GBP CAD Exchange Rate Volatile as Britain Faces ?Decade of Disruption?

The Pound to Canadian Dollar exchange rate fluctuated as the final week of 2016 drew to a close, but due to waning demand for risk-correlated currencies the pair ended the week relatively close to its opening levels.

Overall in 2016 GBP/CAD lost around 40 cents in value. It could continue to fall in the New Year if early results from OPEC’s planned oil output cuts impresses investors.

[Previously updated 29/12/2016]

The GBP CAD exchange rate has become increasingly volatile following a new report that forecasts that Britain faces a ‘decade of disruption’ in the wake of 'Brexit'.

Pound Canadian Dollar (GBP CAD) Fluctuates Following Think-Tank Report

The Pound Canadian Dollar (GBP CAD) exchange rate fluctuated following a report from the Institute for Public Policy Research (IPPR), a left-wing think-tank based in London.

The report suggests that Britain’s economy will be meet by ‘profound shock’ over the next 10 years after the triggering of 'Brexit' as increasing automation could cut up to 600,000 manufacturing jobs while the rising costs of an ageing population could cause adult social care to reach £13bn by 2030.

The think-tank also predicts that UK households will be £1,700 worse off by 2030 due to leaving the EU and that low-income families may see their earning rise by only 2% over the next ten years due to poor growth and rising debt. As the report explained;

‘Even as what we do and how we work changes, the UK is likely to remain trapped in a low growth, low interest rate decade driven by demographic shifts, productivity trends, weak investment, weak labour power, high levels of debt, and the headwinds of a slowing global economy.’

Canadian Dollar Strengthened by Uptick in Oil Prices

Meanwhile the oil-based Canadian Dollar has been bolstered by rising crude prices ahead of the US Crude Oil Inventory report later today.

Analysts currently forecast that US oil inventories will have fallen from 2256k to -1500k in the week ending the 23rd of December, helping prices to stabilise at over $54 a barrel.

Crude prices also continue to rise following the Organization of the Petroleum Exporting Countries (OPEC) announcement that its members had agreed to production cuts in late November, with traders confident that it will have a notable impact on the global surplus.

However, with production cuts only scheduled to take place over six months and not beginning immediately in January and with cuts from non-OPEC countries like Russia not guaranteed, there are concerns that current prices are unsustainable and may fall once again, dragging the ‘Loonie’ with them.

GBP CAD Exchange Rate Forecast: Lull in Data to Renew Focus on Brexit

The GBP CAD exchange rate may become even more volatile before the end of the week’s session as a lack of data from both markets over the holiday period will force traders to focus on outside influences like 'Brexit'.

Ongoing concerns over the impact of 'Brexit' are likely to weigh heavily on the Pound over the next couple of months as growing uncertainty over Prime Minister Theresa May’s plans for negotiating the UK’s split from the EU causes Sterling sentiment to sour.

The high-yield Canadian Dollar is likely to remain closely tied to the value of oil and will rise or fall according to its whims, although pressure from a strengthening US Dollar (USD) could also weigh on CAD.

Current Interbank Exchange Rates

At the time of writing the GBP CAD exchange rate was trending around 1.65 and the CAD GBP exchange rate was trending around 0.60.

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