2014 exchange rate movements
Happy New Year to all, as we welcome 2015. In today’s report, let’s kick things off by looking at where exchange rates have been in 2014 and what the main factors were in terms of movement during those 12 months.
The GBP/CAD exchange rates started the year below CAD$1.75 on the mid market, before climbing over 10 points to above $1.85. To put this in real terms, a typical purchase of CAD$200,000 would have shown a difference of over £6000 between the highs and lows of last year. Most of the movement came in the first couple of months of 2014, before exchange rates settled back down at around $1.80.
The climb in the GBP/CAD exchange rates was due to two main factors. Firstly, sterling saw huge gains against a basket of major currencies due to speculation about an interest rate rise. These rumours have since cooled, as it looks like the BoE will not make a move until the later part of 2015. The other reason is low oil prices. Since Canada is so reliant on oil exports, the low prices have affected the price of the Loonie and kept exchange rates stable around $1.80.
What is moving exchange rates this week?
With very little data to start the week, the year really kicks off on Wednesday for the Canadian dollar. This is when we’ll see the release of trade balance and IVEY PMI figures. This is followed Friday by housing starts, building permits, employment change and the unemployment rate.
These figures will give a good indication of the state of the Canadian economy and how it may perform throughout 2015. With the price of oil still low, it will be interesting to see how this has affected the rest of the economy.
This week we have some key data to start the year. From the UK we will see the release of construction, services, manufacturing data. All of these indicators have the power to move exchange rates dramatically if they differ from the forecast figures.
We also have the latest interest rate decision from the Bank of England. The bank is not expected to move interest rates for some time to come, but any surprising comments that accompany the decision could have a large impact. If the BoE suggest that they could raise rates sooner than expected the pound will strengthen greatly against its counterparts, including the Canadian dollar.
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