GBP/CAD Exchange Rate Holds Steady, Political Uncertainty Rises on New Brexit Deal Time Limit
The Pound Canadian Dollar (GBP/CAD) exchange rate held steady today, with the pairing currently trading around CA$1.639 after French President Emmanuel Macron gave Prime Minister Boris Johnson until the end of this week to fundamentally revise his Brexit withdrawal proposal.
A spokesperson for Élysée Palace commented:
‘The president told him that the negotiations should continue swiftly with Michel Barnier’s team in coming days, in order to evaluate at the end of the week whether a deal is possible that respects European Union principles.’
Consequently, Sterling has failed to gain against the Canadian currency as markets identified heightened risk of a breakdown in UK-EU negotiations. This follows Boris Johnson’s repeated statements that his deal would be the Conservative Government’s ‘final’ offer, despite legislation in place to prevent a disorderly exit on October 31.
Meanwhile, today saw the release of the UK’s Halifax house prices figure for September fall below expectations for 0.2% to -0.4%, coming in a 6-year low.
Russel Galley, Managing Director at Halifax, commented:
‘Looking ahead, we expect activity levels and price growth to remain subdued while the current period of economic uncertainty persists.’
CAD/GBP Exchange Rate Flat, US-China Trade Uncertainty Weighs on ‘Loonie’
The Canadian Dollar (CAD) failed to gain on the Pound after China narrowed its scope for US-China negotiations ahead of talks in Washington this week, placing further pressure on the trade-reliant Canadian economy.
This follows news that various Chinese officials have shown increasing reluctance to pursue a US-China trade deal. As a result, this has weighed on market confidence in the ‘Loonie’ today.
Michael Every, a Senior Asia-Pacific Strategist at Rabobank, commented:
‘Beijing is about to make another epic miscalculation. Trump ALWAYS escalates when put under pressure, and has never shown anything so far but a tendency to raise tariffs when disappointed. If China thinks Trump is going to crumble now just because he faces possible impeachment, they are about to get a very nasty surprise — and hence so are markets.’
GBP/CAD Outlook: Brexit Developments in Focus
Sterling traders will be looking ahead to tomorrow’s speech by Bank of England’s Governor, Mark Carney, and with any dovish comments about the state of the British economy, we could see the GBP/CAD exchange rate begin to ease.
Tomorrow will also see the release of September’s BRC like-for-like retail sales figure, which is expected to flat-line at 0%.
Meanwhile, ‘Loonie’ traders will be awaiting tomorrow’s publication of August’s Canadian building permits figure, which is expected to ease by -2%.
Brexit developments will likely continue to drive the GBP/CAD exchange rate this week, and with any signs of a UK-EU compromise taking place before the end of the week, we could see Sterling begin to rise against the Canadian Dollar.