GBP/CAD exchange rates drop dramatically

Canadian Dollar exchange rates and movements

As you can see from the graph below, over the past month we have seen the GBP/CAD exchange rates fall from highs of around 1.85 to lows of 1.7750. In today’s report we will look at what has caused this movement and how to get the best exchnage rates.

 

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This drop was due to news from both sides of the GBP/CAD cross. Firstly lets look at the UK. Sterling had gained huge strength recently due to speculation that the UK would raise its interest rates before the end of the year. This caused the pound to rise against a basket of major currencies including the Canadian Dollar.

Recently however, the BoE Governor Mark Carney, retraced his steps and said this was unlikely to happen before spring 2015. This caused the GBP/CAD exchange rates to fall back towards the 1.80 level where we started the week.

News from Canada this week has caused the exchange to fall further to around 1.7750. As predicted, the BoC kept interest rates on hold for another month so it was down to the data releases, as to why we saw the GBP/CAD rates decline.

Unlike the UK, the Canadian economy is very much commodities based. This means that is commodities sales are high, the Loonie will generally strengthen. It was Thursday we saw the latest trade balance figures from Canada and they didn’t disappoint. They were forecast to show an increase of 1.1B but when the actual figure was released at an increase of 2.6B, the Canadian Dollar reacted instantly causing the GBP/CAD exchange rates to fall to the recent lows.

To put these movements into real terms, a typical transfer of $200,000 CAD would cost you over $4500 extra today than the same trade would have done a month ago. This just outlines the importance of staying in close contact with your FCG account manager to keep one step ahead of the market movements.

If you would like a free quote on your currency, open a trading facility today. This does not cost or obligate you in any way and gives you access to exchange rates up to 5% better than the high street banks.