Pound Canadian Dollar (GBP/CAD) Exchange Rate Slides as No-Deal Brexit ‘Assumed’ by Government
The Pound Canadian Dollar (GBP/CAD) exchange rate slumped by around 1%.
The pairing is currently trading at an inter-bank rate of CA$1.6135.
The GBP/CAD exchange rate tumbled to the lowest level since September 2017 on Monday afternoon as Brexit pessimism weighed on GBP.
Michael Gove, chancellor of the Duchy of Lancaster stated that the government is currently ‘working on the assumption’ of a no-deal Brexit.
Against the US Dollar, Sterling slumped towards 30-month lows due to the growing no-deal risks and the chance the new Prime Minister will call an early election.
Commenting on this, Analyst at Commerzbank, Esther Maria Reichelt said:
‘The market is now increasingly concerned about hard Brexit being a possibility.’
Boris Johnson: ‘We Can Get a New Deal’
Meanwhile, on Monday, Prime Minister Boris Johnson stated that he did not believe a no-deal Brexit was the most likely outcome.
When asked about Michael Gove’s assumption, the Prime Minister replied:
‘No, absolutely not. My assumption is that we can get a new deal, we’re aiming for a new deal. But, of course, Michael is absolutely right that it’s responsible for any government to prepare for a no deal if we absolutely have to.’
Earlier this morning during the Downing Street lobby briefing, Johnson’s spokeswoman said he was ‘confident’ Brussels would agree to change the withdrawal agreement.
When questioned about the likelihood of a no-deal, the spokeswoman stated:
‘I think he has been clear that the backstop has to be abolished. He remains confident that the EU will stop claiming that the withdrawal agreement cannot be changed. But until that happens we must assume that there will be a no-deal Brexit on 31 October.’
Canadian Dollar (CAD) Rises despite Falling Oil Prices
Meanwhile, the Canadian Dollar rose despite weakened oil prices on Monday.
Prices slipped as pessimism over tomorrow’s in-person US-China trade talks in Shanghai and slower global economic growth meant the demand for crude oil could slide.
While growth in the US slowed less than expected, growth outside the US is slowing at a faster rate thanks to US-China trade tensions.
Commenting on this, Director of Energy Research at Standard Chartered, Emily Ashford said:
‘Even though the crude oil supply picture is fundamentally tight […] and geopolitical risks front and centre, the market remains extremely bearish around demand risks due to the escalation in protectionist trade policies and the risk of additional punitive tariffs.’
Pound Canadian Dollar Outlook: Stronger than Forecast GDP to Buoy CAD?
Looking ahead to Tuesday, the Canadian Dollar (CAD) could slide against the Pound (GBP) ahead of the US-China trade talks in Shanghai.
It is largely expected that this week’s in-person trade talks will not result in a breakthrough, which could weigh on the ‘Loonie’.
Meanwhile, on Wednesday the Canadian Dollar could rise following the release of May’s GDP data.
If the Canadian economy grows more than forecast, the Pound Canadian Dollar (GBP/CAD) exchange rate may slump.