Oil Forecast Deteriorates and Pound Sterling Gains vs CAD & NOK Today

April 18, 2016 - Written by James Fuller

STORY LINK Oil Forecast Deteriorates and Pound Sterling Gains vs CAD & NOK Today

The Pound has been able to appreciate heavily against peers such as the CAD today, thanks in part to the recent slump in global oil prices. On the reserve front, however, the recent discovery of the Gatwick Oil, potentially worth billions to the UK, has sent Sterling's value soaring.

Oil Prices Slump after Saudi Arabia and Iran fail to Agree Terms of an Output Freeze

The weekend market shutdown in the global currency markets was marked by a potentially damaging disagreement between one-time pariah state Iran and Saudi Arabia at yesterday’s meeting of oil producers at Doha.

Saudi Arabia, the world’s number one oil producer, had previously indicated that it remains willing to freeze its level of output in an effort to push the price of a barrel of crude oil higher.

However, Iran snubbed the Riyadh administration’s offer, refusing even to send a representative to the oil summit, and stating that, ‘as we're not going to sign anything, and as we're not part of the decision to freeze output, we ultimately decided it was not necessary to send a representative.’

CAD, NOK Exchange Rates Decline as Oil Prices Fall

The price of a barrel of benchmark Brent Crude slumped towards $40.50 earlier today as a result of the participants’ failure to reach an accord in Doha.

This represented a sharp downward move from last week’s near-term highs of close to $45 for oil and the move had pronounced ramifications in the global currency markets.

Oil producing nations including Norway and Canada saw their currencies take a hit, with the Pound Sterling traded up by as much as 0.8% against the Canadian Dollar (currency : CAD) at one point. Meanwhile, the UK unit jumped in value by 0.65% against the Norwegian Krone (currency : NOK).

Elsewhere, the Pound Sterling has been weighed down on the session by the latest Rightmove House Price survey, published overnight, which suggested that British property prices have increased by an annualised 7.3% this month – significantly down from last month’s print of 7.6%.

Many industry insiders feel that UK property prices are suffering as potential buyers postpone their purchases until after the UK’s EU In / Out referendum on 23rd June. If these FX insiders are correct, then there could be further downside to follow for the Pound Sterling against the other sixteen most actively traded global currencies.

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TAGS: Canadian Dollar Forecasts Norwegian Krone Forecasts Pound Canadian D Forecasts