GBP/CAD Exchange Rate Rangebound as Canadian Markets Unmoved by Improving US-China Relations
The Pound Canadian Dollar (GPB/CAD) exchange rate held steady today at around CA$1.627 following the release of July’s Canadian new housing price index, which fell below expectations from -0.2% to -0.4%. Month-on-month housing prices also eased, falling by 0.1% in August.
The Canadian Dollar steadied against the Pound today despite improving US-China trade relations, which would normally boost optimism in the trade-reliant Canadian economy.
This follows US President Donald Trump’s agreement to suspend tariffs on US$250 billion of Chinese goods, which are due to go into effect on October 15.
James McCormack, Head of Sovereign Ratings at Fitch, sowed seeds of doubt in Mr Trump’s gesture of ‘goodwill’:
‘Things change very quickly, it’s hard to know what motivation there is – to be honest – on the U.S. side. So, I wouldn’t want to read too much into a small concession suggesting that we’re on the road to this being resolved.’
As a result, many ‘Loonie’ traders are remaining cautious today, with fears a slowing global economy continuing to weigh on confidence in the Canadian economy.
GBP/CAD Exchange Rate Flat, No-Deal Brexit Fears Continue to Haunt UK Markets
The Pound held steady against CAD following the announcement from Belfast’s High Court that a no-deal Brexit and a hard border would not damage Northern Ireland’s peace process, citing it as a matter of politics and not law.
Lord Justice Bernard McCloskey commented:
‘Within the world of politics, the well-recognised phenomena of claim and counter-claim, assertion and counter-assertion, … posturing, strategy and tactics are the very essence of what is both countenanced and permitted in a democratic society.’
As a result, Sterling traders are becoming increasingly jittery as the Conservative Government continues to maintain its honouring of the October 31 Brexit deadline, despite newly-formed legislation put in place to block a no-deal.
In the UK’s economic news, August’s RICS housing price balance failed to provide any uplift for the Pound, despite improving from -9% to -4%.
GBP/CAD Outlook: Brexit Developments to Remain in Spotlight
The Canadian Dollar (CAD) will likely remain driven by global political developments. Any indication of a flare-up between the US and China could begin to weigh on the ‘Loonie’.
With no UK economic data releases due out until next week, Sterling will remain driven by Brexit developments. Should the Conservative Party show any signs of compromise with the EU and forward a realistic deal, we could see the GBP/CAD exchange rate begin to edge higher.
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