GBP/CAD Exchange Rate Rangebound, Canadian Markets Await US-China Trade Deal
The Pound Canadian Dollar (GBP/CAD) exchange rate held steady today, with the pairing currently trading around CA$1.695 as the oil-sensitive ‘Loonie’ continues to trade in a narrow range as oil prices ease off and investors await the signing of the US-China ‘phase one’ trade deal this week.
The Canadian Dollar (CAD) is expected to remain generally steady against the Pound (GBP) today as markets wait until Wednesday when the US-China trade pact is likely to be the week’s main driver.
We could see the ‘Loonie’ rebound, however, as oil prices are showing increasing signs of modestly rebounding.
Edward Moya, Analyst at OANDA, commented:
‘Oil prices are tentatively rebounding after seller exhaustion kicked in as investors await the next developments on the trade front and as earnings season begins.’
GBP/CAD Exchange Rate Steady, Sterling Under Pressure from BoE Rate Cut Fears
The Pound (GBP) failed to make any headway on the Canadian Dollar (CAD) today as it continues to suffer from Monday’s plunge, following a fresh rise in odds that the Bank of England (BoE) could cut UK interest rates as early as this month.
This follows comments from members of the central bank’s Monetary Policy Committee, with Gertjan Vleghe saying that, depending on the health of the UK economy, he would go ahead and vote for an interest rate cut to stimulate growth.
Silvana Tenreyro, another policymaker, commented:
‘If uncertainty over the future trading arrangement or subdued global growth continue to weigh on demand, then my inclination is towards voting for a cut in Bank rate in the near term.’
Today saw the GBP/CAD exchange rate benefit from further clarity on a UK-EU trade deal after Prime Minister Boris Johnson said that he was ‘very’ confident that a free trade deal could emerge this year.
Boris Johnson said:
‘Enormously likely, how about that? Epically likely … Obviously you always have to budget for a complete failure of common sense. That goes without saying. But I am very, very, very confident – three verys there – that we will get [a deal]’.
GBP/CAD Outlook: US-China Trade Deal in Spotlight
Pound (GBP) investors will be looking ahead to tomorrow’s release of December’s year-on-year inflation figure, which is forecast to hold at 1.5%. As this continues to fall below the Bank of England’s target, it could weaken the GBP/CAD exchange rate on heightened fears of an interest rate cut in the near-term.
Tomorrow will also see a speech from Michael Saunders, a member of the UK central bank’s Monetary Policy Committee. Any dovish commentary about the UK economy going forward would prove Pound-negative.
CAD traders will be paying close attention to the US-China trade deal this week. If the two superpowers concede on a ‘phase one’ agreement, we would see the risk-sensitive Canadian Dollar begin to edge higher against the Pound.