Canadian Dollar responds to oil price jump

Pound enjoys uplift
Both the Pound and the Canadian Dollar enjoyed a strong November, however, the Pound pipped the Loonie, finishing just below 1.70 after starting the month around 1.66.

The Pound was boosted by Trump’s unexpected win and various ‘reassuring’ soundbites from policymakers and government. Brexit Secretary, David Davis, said the UK would consider making payments to the EU after it exits to secure the best possible access to the EU single market, what he refers to as the “major criterion".

The Brexit debate continues
The UK government has been appealing to the Supreme Court with the argument that a Parliamentary vote is not needed to trigger Article 50. Should the government win the case, a ‘Hard Brexit’ may be on the cards, which could send the Pound tumbling. While the government appeal is expected to end on Thursday, the actual verdict isn’t due until January 2017 – so expect uncertainty ahead.

Canadian Dollar responds to OPEC oil supply cuts
The Canadian Dollar is still moving in following last week’s historic news from The Organization of the Petroleum Exporting Countries (OPEC), which saw the Interbank GBP-CAD exchange rate fluctuate between 1.68 and 1.69. The oil cartel has agreed its first supply cut in eight years in order to boost the price of oil, as a cut of 1.2 million barrels a day would start from January. This announcement comes after more than two years of depressed oil prices, which have more than halved since 2014 due to a supply glut on the market. The price of Brent crude jumped 10% to $51.94 a barrel.

Pound Sterling-Canadian Dollar exchange rate movement may occur as a result of Canadian trade balance statistics due this month and the Bank of Canada (BoC) interest rate decision. From the UK, all ears and eyes will be trained on any Brexit related discussion.
 

Guidance for buyers and sellers of Canadian Dollars
Looking ahead, for those buying CAD we would suggest approaching next year with caution and that the recent move higher could be a reasonable time to remove some risk from the situation.
 

Winter is coming…
We expect January and February to be a rocky road, filled with uncertainty, which in turns looks like it could weigh on the Pound. Be prepared for what lies ahead.