GBP/CAD Exchange Rate Surges as BoC Pauses Rate Hikes
The Pound Canadian Dollar (GBP/CAD) exchange rate surged today, and is currently trading at CAD$1.7029, as the Bank of Canada (BoC) holds interest rates at 1.75%.
The ‘Loonie’ has been suffering from news that General Motors of Canada will close down its Oshawa car plant, along with the news that the Alberta government will cut oil production amidst multi-year low prices.
The Pound (GBP), however, benefited from yesterday’s announcement from the European Court of Justice (ECJ) that the UK could revoke Article 50 unilaterally.
This provided a sense of renewed optimism for investors as options opened-up should Theresa May’s UK-EU withdrawal agreement faces Parliament’s rejection on December 11.
GBP/CAD Exchange Rate Boosted after Increased Brexit Options
GBP was boosted by yesterday’s batch of Brexit developments, with MP Dominic Grieve’s amendment being passed, allowing Parliament more control over a possible ‘no-deal’ vote on May’s Brexit withdrawal agreement.
This has eased GBP investors’ concerns over a possible Brexit ‘no-deal’, and has – along with ECJ’s news on Article 50 – opened up the possibility of a second referendum.
The Pound (GBP), however, stumbled today on lower-than-expected figures from the services PMI for November, which showed 50.4 – which is only just above contraction territory.
Meanwhile, GBP was pressured by the latest new car sales figures, which showed a decrease of -3% for November, against October’s -2.9%.
Canadian Dollar Pound Sterling (CAD/GBP) Exchange Rate Plummets as Canada’s Economy Slows Down
The Canadian Dollar (CAD) was hit by increasing signs of renewed trade tensions stewing between the US and China, with US President Donald Trump hinting that the G20 summit ‘truce’ is still sensitive, saying in a tweet:
….I am a Tariff Man. When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so. It will always be the best way to max out our economic power. We are right now taking in $billions in Tariffs. MAKE AMERICA RICH AGAIN
— Donald J. Trump (@realDonaldTrump) December 4, 2018
The ‘Loonie’ has also been hit by today’s BoC’s interest rate decision, in which no change was actioned.
CAD could also be dented by tomorrow’s release of the Ivey PMI, which shows an expected decrease in business conditions and further hinting at a slowing Canadian economy.
However tomorrow also sees the release of export and import data from Statistics Canada, which are expected to reveal an increase.
GBP/CAD Outlook: Brexit Remains in Driving Seat with US-China Trade Tensions Concerning ‘Loonie’ Investors
The Pound Canadian Dollar (GBP/CAD) exchange rate is likely to remain driven by political developments in the coming week, with Theresa May increasingly under pressure for her Brexit withdrawal agreement to be accepted by Parliament on 11 December.
Friday will see the release of Halifax house prices for November, which are expected to decrease, likely dampening market confidence in Sterling.
The ‘Loonie’ will be particularly sensitive to Friday’s release of employment figures for November, which are expected to decrease.
Overall, the GBP/CAD exchange rate is likely to be dominated by Brexit news and any signs of US-China trade tensions flaring up again over the coming days.