Pound to Canadian Dollar Exchange Rate Slips Back from Highs on Canadian Trade Hopes
A combination of Brexit hopes and market aversion for risky currencies have caused the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate to surge for most of the week, but on Thursday GBP/CAD fell back from those highs.
GBP/CAD is still on track to sustain its first week of gains in over a week though, having recovered most of last week’s fall from 1.6779 to 1.6659. At the time of writing on Thursday, GBP/CAD trended in the region of 1.6760.
Despite concerns about the possibility of a ‘no deal’ Brexit limiting the Pound’s strength, Sterling (GBP) has been able to climb considerably against the Canadian Dollar (CAD), which was battered by trade uncertainties.
Investors have been selling the Canadian Dollar this week due to concerns that US-China trade tensions may not soften any time soon, as well as due to some disappointing Canadian ecostats.
Pound (GBP) Exchange Rates Avoids Further Falls on Brexit Hopes and UK Data
This week’s UK data has been decent enough to support the Brexit-battered Pound slightly and keep it away from its worst levels, and speculation that there could soon be optimistic Brexit developments helped even more.
Tuesday saw the publication of Britain’s July public sector net borrowing report, which saw the surplus print much higher than expected.
However, the Confederation of British Industry’s (CBI) industrial trends orders report for August did fall short of expectations. This, as well as lasting concerns about the possibility of a ‘no deal’ Brexit limited the Pound’s gains.
Still, overall this week investors have been more cautiously optimistic about the Brexit process than they had in weeks.
UK and EU negotiators appeared to show more optimism that a UK-EU trade deal was still likely to be reached, which relieved investors following recent comments from officials that a ‘no deal’ Brexit was becoming more likely.
Canadian Dollar (CAD) Exchange Rate Rebounds from Lows on NAFTA Hopes
Investors had spent most of the week selling the relatively risky trade-correlated Canadian Dollar due to numerous factors, both global and domestic.
The risky Canadian Dollar was unappealing amid concerns that US-China trade tensions may not soften much, despite fresh trade talks between some officials from the nations.
As well as geopolitical uncertainties, the Canadian Dollar was pressured by the latest Canadian data, which fell short of expectations in many key prints.
Canada’s June wholesale sales report from June unexpectedly slumped from 0.9% to -0.8%, despite being forecast to only slow to 0.8%.
June’s Canadian retail sales results were disappointing too, contracting at -0.2% month-on-month rather than slowing to the expected 0.1%. The print excluding autos also fell to -0.1%.
However, towards the end of the week the Canadian Dollar outlook improved as North American Free Trade Agreement (NAFTA) negotiators from Mexico indicated that a new US-Mexico deal on NAFTA may be very close.
The news bolstered hopes that Canada could soon re-join NAFTA talks, and that a deal could be reached before US congressional elections in November.
Pound to Canadian Dollar (GBP/CAD) Forecast: Investors Anticipate Trade Developments
Amid a lack of notable UK or Canadian ecostats due for publication until next week, the Pound to Canadian Dollar (GBP/CAD) exchange rate is likely to be driven by political and geopolitical developments until the end of the week.
As it stands, GBP/CAD is on track to sustain gains this week, but any disappointing Brexit news could drag the Pound lower while optimistic developments in North American Free Trade Agreement (NAFTA) renegotiations could bolster the Canadian Dollar.
Of course, if there are any signs of softening stances in UK-EU Brexit negotiations, the Pound could resume this week’s climb versus the Canadian Dollar instead.
UK finance mortgage approvals data from July will be published on Friday, but in terms of data Pound investors are more likely to await next week’s August consumer confidence stats.
Developments in Brexit or NAFTA, as well as next week’s anticipated Canadian Gross Domestic Product (GDP) data, is most likely to influence the Pound to Canadian Dollar (GBP/CAD) exchange rate outlook in the coming week.