GBP/CAD Exchange Rate Rangebound as Brexit Back in Spotlight
The Pound Canadian Dollar (GBP/CAD) exchange rate is trading in a narrow range this morning as Brexit returns to the spotlight as Boris Johnson prepares to meet with European Commission President, Ursula von der Leyen.
At the time of writing the GBP/CAD exchange rate is trading at around CA$1.7065, virtually unchanged from this morning’s opening levels.
Will the Pound (GBP) Stumble as Johnson Tells EU he Will not Seek ‘Alignment’ in Trade Deal?
The Pound (GBP) faces some possible headwinds today as Boris Johnson holds his first meeting with new European Commission President, Ursula von der Leyen in Downing Street.
Johnson is expected to tell von der Leyen that the UK will not be seeking a trade deal based on alignment with the EU as it seeks instead to reach an ambitious free trade agreement (FTA).
A statement released by Downing Street last night read:
‘At the leaders’ first face to face meeting since Von der Leyen took office in December, the prime minister is expected to stress the importance of agreeing a confident and positive future relationship by the end of December 2020.
‘The prime minister will likely underline that the upcoming negotiations will be based on an ambitious FTA, not on alignment.’
Johnson’s decision to pursue a FTA is unlikely to inspire confidence in GBP investors as many fear it would be more disruptive to the UK economy that a deal based on alignment, whilst others doubt such an ambitious deal could be reached before the end of 2020 to prevent the UK crashing out without any deal at all.
Canadian Dollar (CAD) Struggles to Find Stable Footing amid Volatile Oil prices
Trade in the Canadian Dollar (CAD) is becoming increasingly erratic in the opening days of 2020, as the commodity-correlated currency closely tracks the rollercoaster ride oil prices have been on over the last week.
The volatility in oil prices has been fueled by an escalation of tensions in the Middle East, with markets fearing global supplies could be disrupted by conflict between the US and Iran.
News that Iran carried out a ballistic missile strike against US airbases in Iraq prompted the most recent spike in oil prices, with Brent crude spiking above $70 a barrel and pulling the ‘Loonie’ high alongside it.
However these gains evaporated almost as quickly as they came as US President Donald Trump refrained from escalating tensions further in his initial Twitter response.
Markets now look to the US assessment of damage and official response later today, with both Oil and the Canadian Dollar likely to spike if the White House signals it may seek to retaliate militarily.