Pound to Canadian Dollar Exchange Rate Fails to Hold Weekly Gains despite Weak Canadian Outlook
While the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate has avoided losses this week, the pair’s gains have been limited too. While Sterling (GBP) briefly saw a jump in demand in the middle of the week, Brexit uncertainties have limited its potential for gains.
Since opening this week at the level of 1.7560, GBP/CAD briefly dipped but has largely trended with an upside bias. On Wednesday evening, Brexit hopes briefly boosted the pair to 1.7720 – its best level since April 2018.
Fresh Brexit uncertainties on Thursday left GBP/CAD unable to hold its best levels though, and the pair trended closer to the level of 1.7618 at the time of writing.
Doubts that the UK and EU would be able to break a deadlock on Brexit talks led to one of the Pound’s sharpest drops in weeks, which prevented it from capitalising on recent Canadian Dollar (CAD) weakness.
Pound (GBP) Exchange Rates Tumbles on Doubts of Brexit Deal Support
The UK government has been trying to renegotiate the wording of its UK-EU Brexit deal in recent weeks, in the hopes that the deal can be made popular enough domestically to pass through Parliament.
However, despite confidence from the government occasionally bolstering soft Brexit hopes and Pound demand, the EU’s stance on negotiations does not appear to have budged since negotiations reopened.
Towards the end of the week, with only a few days left until the Parliament’s next meaningful vote on Brexit, doubts rose that the deal would be popular enough to pass and the Pound tumbled again, shedding most of this week’s gains.
Analysts are currently betting that Brexit will be delayed by a few months and that a free trade deal would eventually be reached that critics would agree to support. These expectations are keeping Sterling from tumbling further.
Canadian Dollar (CAD) Exchange Rates Struggles to Recover amid Poor Canadian Economic Outlook
While the Pound was sold on fresh Brexit uncertainties towards the end of the week, the Canadian Dollar was unable to capitalise on its weakness as recent weakness in Canadian data left the Canadian currency fairly unappealing.
Since last week, the Canadian Dollar has been weaker on poor Canadian growth stats, and this week saw Canada’s trade balance, productivity figures, and building permits stats fall short of expectations as well.
On top of this, the Bank of Canada (BoC) took a ‘wait and see’ stance on monetary policy during its policy decision this week, indicating that it expected Canadian economic activity to be weaker in the first half of 2019.
Prices of oil, Canada’s most lucrative export, have also been mixed. As a result the Canadian Dollar’s support has been weak and GBP/CAD has been able to hold above the week’s opening levels.
Pound to Canadian Dollar (GBP/CAD) Exchange Rate to be influenced by Canadian Job Stats and Brexit Vote
The incoming sessions have the potential to be highly influential for the Pound to Canadian Dollar (GBP/CAD) exchange rate, as major Canadian data will be published and the next major step in the Brexit process is expected to take place.
Friday’s American session will see the publication of Canadas February job market report. If Canadian employment is worse than expected or the unemployment rate unexpectedly worsens, GBP/CAD could climb further of Canadian Dollar weakness.
Of course, stronger Canadian data could have the opposite impact and would push GBP/CAD lower.
As for Sterling, amid a lack of developments in UK-EU Brexit negotiations, any signs of movement here before next Tuesday’s meaningful Brexit vote in Parliament could influence the Pound.
Some UK officials have said they still hope for developments over the weekend. If there are any, the Pound could see a jump in demand.
The big focus for Sterling will be Parliament’s Brexit vote on Tuesday though, when the government’s Brexit plan could be blocked again leading to further uncertainty and weakness in the Pound to Canadian Dollar (GBP/CAD) exchange rate outlook.