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Canadian Dollar Research Report

Published: Thursday 05 January 2017

  • Positive UK data not enough for the Pound
  • Brexit to bring a turbulent first quarter
  • Global ripple effects from crude oil markets

Positive UK data not enough for the Pound

The Pound has struggled over the festive period, as Brexit woes look set to return to the forefront of the media and influence the somewhat apprehensive markets. GBP-CAD has dropped over two cents in the last week, despite UK data being upbeat.

Brexit to bring a turbulent first quarter

A turbulent first quarter is expected for both the Pound and the Canadian Dollar, however, Brexit will more than likely trump Canada’s crude oil market concerns. With the anticipation that there are now fewer than three months until Theresa May invokes Article 50, markets are struggling to prepare; as traders, politicians, businesses and the media all seem bemused as to what the outcomes may be. The recent resignation of one of the UK’s top EU ambassadors, Sir Ivan Rogers, further added to the underlying fear that Britain is headed for a ‘Hard Brexit’ devoid of single market access.

Global ripple effects from crude oil markets

Across the pond, buoyant crude oil markets continue to dominate the outlook for the Canadian economy. Although the global oversupply remains and crude is still under half the value of its 2014 peak at US$110 per barrel, the commodity is still trading around its highest levels in six months.

Guidance for CAD buyers and sellers

The outlook for GBP-CAD is somewhat hazy and will be very much influenced by the upcoming result of the UK Supreme Court ruling on Article 50. If the Supreme Court overturns the previous ruling, the odds of a ‘Hard Brexit’ will soar, which is likely to cause a major Pound sell-off. Should the Supreme Court back the judgement of the High Court, the Pound is likely to rocket higher on the improved odds of a ‘Soft Brexit’.
With volatility expected in the coming months, this is a perfect opportunity to place an order to target a higher rate, but at the same time, having a stop loss in place to limit downside risk. At this stage, there is no harm placing an optimistic level and simply seeing what happens. If you would like guidance more tailored to your specific requirements, please do get in touch and speak to your currency consultant. 

Research Report by Michael Hart


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