Pound Sterling Canadian Dollar (GBP/CAD) Exchange Rate Edged Higher as Polls Predict Tory Majority
The Pound Sterling Canadian Dollar (GBP/CAD) exchange rate edged higher on the last day before the UK general election. The pairing is currently trading at around CA$1.7414.
Sterling was left flat against a handful of currencies on Wednesday as markets were left unsure whether or not Prime Minister Boris Johnson would secure a majority.
In a poll released on Tuesday evening, YouGov downgraded its forecast, predicting a Tory majority of 28 seats.
Just two weeks earlier, the pollsters predicted a majority of 68, which buoyed the Pound.
However, in YouGov’s update to their earlier poll they also added that Johnson could fail to secure a majority government. But, this did little to stop GBP rising against the ‘Loonie’ as traders continued to remain optimistic.
This would cause a fresh bout of Brexit uncertainty and commenting on this, TorFX Head of Trading, Adam Solomon said:
‘The Pound has been testing strong resistance levels above 1.19 against the Euro and close to 1.32 versus the U.S Dollar, the highest levels seen since May 2017 and the second highest since the 2016 referendum.The market is always forward thinking. It puts the cart before the horse. If the Tories do win a majority on Thursday, it won’t be a surprise to anyone. To that end, it would be reasonable to expect a fairly muted reaction in the market. GBP sellers have already won and have the benefit of a Tory majority win in the current market rates. The risk, then, is what will happen in the event of a Hung parliament.’
Canadian Dollar (CAD) Slides as Oil Prices Fall
The oil-sensitive Canadian Dollar remained under pressure on Wednesday, slipping against GBP after oil prices slumped.
An unexpected rise in US crude inventory weighed on prices while investors continued to wait for further news on US-China negotiations.
Markets braced for the possibility of a fresh round of US tariffs to be slapped on Chinese exports on Sunday.
Tensions between Washington and Beijing continued to cloud the outlook for demand as the newest deadline for tariffs fast approaching.
The market is already expected to be over-supplied in the next year thanks to an increase in shale oil output. Further tariffs will likely dent demand, sending prices lower and weighing on ‘Loonie’ sentiment.
Commenting on this, oil risk manager at Japanese trading house Mitsubishi Corp, Tony Nunan said:
‘The big question is how will the demand hold up?
‘The demand slowdown in growth, a lot of it seems to be coming from the [US-China] trade war. If tariffs go into effect, sentiments will turn bearish again.’
Pound Canadian Dollar Outlook: Will Falling Oil Prices Send CAD Lower?
Looking ahead, the Pound (GBP) remain flat against the Canadian Dollar (CAD) as markets await the results of the UK election on Friday.
However, if investors continue to remain optimistic that the Conservative Party will be able to secure a majority, Brexit optimism could buoy Sterling.
Meanwhile, increased US-China tensions could weigh on oil demand this week, sending the oil-sensitive ‘Loonie’ lower.
If tensions increase between Washington and Beijing as the tariff deadline nears, the Pound Canadian Dollar (GBP/CAD) exchange rate is likely to rise.