02 Jan TRADING EDUCATION: GBP CAD
The GBP CAD is known colloquially within forex trading as simply the “Pound-CAD”.
The Canadian Dollar is the seventh most-traded currency in the world, whilst Sterling (GBP) is the third most popular reserve currency, also forming part of the International Monetary Fund’s Special Drawing Rights. Both are referred to as ‘majors’ of the forex markets due to the fact that both the GBP and CAD are held as forex reserves by most major central banks.
Economic reports measuring the UK’s growth, unemployment levels and trade tend to have an effect on the currency’s price, as well as the interest rate set by the Bank of England and any other major fiscal policy changes.
It must also be noted that the GBP is considered a safe haven currency in times of significant market risk as a result of the Pound’s long term stability coupled with the superb track record of the independent Bank of England.
In comparison, the Canadian Dollar is heavily influenced by the price of oil and is often referred to as a petrocurrency or more commonly as a commodity dollar currency. This is in large part due to the fact that Crude Oil & Petroleum products account for 28% of Canadian exports.
The CAD can also be heavily affected by world economic trends and the fluctuation within demand for the commodities it exports which centre around Petroleum, Crude Oil, Natural Gas and Timber.