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Pound to Canadian Dollar Rate Nears 6-Week Low, as Oil Rises

Market CommentaryPound to Canadian Dollar Rate Nears 6-Week Low, as Oil Rises
Pound to Canadian Dollar Rate Nears 6-Week Low, as Oil Rises
Pound to Canadian Dollar Rate. Image credit: Robfoto.

The pound to Canadian dollar interbank exchange rate stands at 1.7367 this morning, just 0.01% above its lowest in 6 weeks, or since February 26th.

This could be helpful information for you to transfer money to the UK, if you're a Brit living in Canada and planning to repatriate, or a Canadian intent on emigrating to Great Britain.

Some big factors why the pound to Canadian dollar rate has fallen recently is that the price of oil, Canada's biggest export, has risen, while Canada's housing construction bounced back in March.

Meanwhile, in the UK, among other factors, uncertainty over the Conservative and Labour parties' Brexit talks continues to weigh on the pound.

You can get a highly competitive exchange rate to transfer money from Canada to the UK, by entering your details into the form on the right-hand side of this page.

Let's look more closely at which factors that have weakened sterling versus the Canadian dollar to this near 6-week low recently.

Price of Oil, Canada's Biggest Export, Rises

A first factor why the pound has neared this 6-week low against the loonie dollar today is because the price of oil, Canada's biggest export, has risen, according to CNBC.

The oil price rose by +2.1% to $64.40 a barrel yesterday, its highest in over 5 months, or since November 1st 2018. As a result, when Canada's oil refineries sell more oil to their foreign customers, they'll make more money, thus fuelling Canada's economic growth.

The oil price has risen, first because there's fighting in oil-rich Libya. In particular, on Monday, Eastern forces neared the capital, Tripoli. It's feared that this will disrupt Libya's oil production.

In addition, the price of oil has risen, as OPEC and Russia have agreed to withhold supply by around 1.2 million barrels per day this year. Lastly, America's economic sanctions against oil-rich Iran and Venezuela are weakening the oil price too.

Canada's Housing Construction Rebounds in March

In addition, another reason why the pound to Canadian dollar rate has neared this 6-week low is because Canada's housing construction sector increased its activity last month, says Reuters.

According to the Canadian Mortgage and Housing Corporation recently, Canada's housing starts rose to 192,527 units in March, +15.8% above February's 166,290 units. In particular, there was a rise in the construction of multiple unit and single detached urban homes.

"There’s no doubt the Canadian housing market has slowed in the past year, but the latest data on construction suggests the downward trend is stabilizing," says Sal Guatieri, senior economist at BMO Capital Market about these positive figures.

This data bodes well for Canada's construction industry in early 2019. This too might accelerate Canada's Gross Domestic Product (GDP) growth in Q1, so has helped strengthen the Canadian dollar.

Conservative and Labour Brexit Talks Face Difficulties

Also, a further explanation why the pound to Canadian dollar interbank exchange rate has neared this 6-week low is because, in the UK, the Conservative and Labour Parties' talks to agree a Brexit deal face several difficulties, reports the BBC.

Last week, UK Prime Minister Theresa May and Labour leader Jeremy Corbyn began cross-party talks, to agree a Brexit deal that both parties can agree to. This was to break what Mrs. May has called the Brexit "logjam", and their first meeting was described as "constructive".

However, since then, 100 Conservative councillors have written to the Prime Minister, saying that support for the Tories is "in freefall". Meanwhile, 60 Labour MPs have warned Mr. Corbyn that, unless any agreed deal goes to a public referendum, it will be "illegitimate".

This has raised the possibility that Mrs. May and Mr. Corbyn might have to abandon their talks, to placate their party bases. If so, this would uncertainty to the UK's Brexit outlook, so this has contributed to weaken the pound to Canadian dollar rate too.

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Please bear in mind, this article is Pure FX’s opinion only and does not constitute advice. Moreover, the exchange rates referred to in this article are the interbank rates, which are the rates at which banks and financial institutions buy and sell currency to each other. Therefore these exchange rates cannot be accessed by individuals or SMEs, and are not the same rates that Pure FX can offer. To get a free exchange rate quote, call us on +44 (0) 1494 671800, or email peter.lavelle@purefx.co.uk.

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