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Morgan Stanley recommends selling GBP/CAD this week

Discussion in 'Market News' started by ForexLive, Jan 25, 2016.

  1. ForexLive

    ForexLive Forum Member

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    Morgan Stanley's trade of the week is to sell GBP/CAD "The direct terms of trade effect of fluctuating oil prices is more significant for CAD compared to GBP. The oil price impact on GBP is of indirect nature, coming via falling dividend payments of its oil sector investment and the investment flows of sovereign wealth funds. Sovereign wealth fund flows into the UK relative to GDP are five times higher than flows into the US. This reduced oil-related net inflow into the UK is long term, while terms of trade effects work immediately. Hence, the oil short-covering rally should work in better support for CAD compared to GBP.

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