GBP/CAD Recovery Hinges on Oil Prices as Brent Hits Ten-Day Low
The British pound's recovery against the Canadian dollar is looking fragile, but softer oil prices could give it the momentum it needs.
The GBP/CAD exchange rate has made steady gains through September, but these gains are within a trend that has been pointing lower since July. Oil is the key factor here, as the Canadian dollar has relied on firm crude prices for support. Brent oil touched a ten-day low on Monday, which could give the pound's recovery the push it needs.
The 21-day and 100-day moving averages are converging and about to cross, but this crossover is not clear cut. The past month's price action has caught up with the trend of the past five months, making a short-term average meeting a medium-term one. However, the market will likely trade around these averages before giving direction.
A break below $100 in Brent oil would remove part of the Canadian dollar's support. Bank of Canada Governor Tiff Macklem is set to speak on Monday and could provide insight into how tariffs and rising energy prices affect policy decisions. A hawkish tone from Macklem would support the Loonie, while concern for growth would weigh it down.