THE pound rallied from a ten-week low against the Canadian dollar on Wednesday, gaining around half a cent as the currency was pressure by a drop in oil prices.
The pound rallied from a ten-week low against the Canadian dollar on Wednesday
GBP/CAD is currently at around C$1.673, up from the low of C$1.669 struck yesterday morning, although the pairing has slipped 0.9 per cent from the session’s starting levels.
Crude prices plummeted by around 4 per cent on Wednesday, with U.S. West Texas Intermediate (WTI) crude futures posting losses of $1.94 and ending yesterday’s session at $45.13 a barrel, eliminating much of the commodity’s recent gains and dragging on the Canadian dollar.
The latest fall comes as reports suggest that exports from Organization of the Petroleum Exporting Countries (OPEC) rose last month, despite an agreement from its members to cut production levels for the remainder of 2017.
Bank of America Merrill Lynch (BAML) said: “Against expectations, OECD total oil inventories are still above three billion barrels and the recovery in Libyan and Nigerian supplies, coupled with a fast return of US shale, should prevent steep stock draws ahead.”
GBP/CAD is currently at around C$1.673
BAML also moved to lower its WTI forecast for 2017, predicting that it will now average $47 a barrel, down from initial estimates of $52 a barrel.
Meanwhile the fall in oil helped to offset a disappointing Services PMI from the UK yesterday, preventing sterling from enduring any major losses.
Wednesday’s data showed that activity in Britain’s service sector slipped in June with the index compiled by IHS Markit tumbling from 53.8 to 53.4.
This capped off a trio of poor data for the UK, with both the manufacturing and construction PMIs also sliding earlier in the week.
After a strong start to the second quarter, markets had hoped that the UK’s economy would have rebounded sharply over the last three months, however the slowdown in June has caused many economists to lower their expectations, with growth now forecast to strike just 0.4 per cent.