Home » CAD » Pound to Canadian Dollar Exchange Rate Forecast: Could Canada Join US Trade Deal This Week?

Pound to Canadian Dollar Exchange Rate Forecast: Could Canada Join US Trade Deal This Week?

Canadian Dollar Currency Forecast

Pound to Canadian Dollar Exchange Rate Slumps Back to Near 2018 Lows on Canada Trade Hopes

A combination of Brexit jitters and trade hopes sent the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate plunging on Tuesday, and the pair has since struggled to recover amid.

Despite rising from 1.6645 to 1.6721 last week on underwhelming Canadian data and oil price uncertainties, this week has seen GBP/CAD already shedding most of those gains.

On Wednesday morning, GBP/CAD briefly tumbled to a low of 1.6600. This was the pair’s worst level in almost half a month, and was very close to the worst levels of the year.

Investors bought the Pound (GBP) up slightly from its cheapest levels on Wednesday, but the Canadian Dollar’s (CAD) Tuesday surge still left GBP/CAD nearer its worst levels than the week’s opening levels.

Canadian Dollar investors have been excited by the possibility that Canada could re-join North American Free Trade (NAFTA) renegotiations, and that a new deal could be completed as soon as this week.

Pound (GBP) Exchange Rates Fail to See Sustained Recovery as Brexit Jitters Weigh

Some investors opted to buy the Pound back from its cheapest levels on Wednesday, following its Tuesday slump.

However, with the Pound outlook still dominated by Brexit uncertainties investors ultimately have little reason to buy the British currency.

Markets remain jittery about the possibility of the Brexit process unfolding with ‘no deal’, often perceived as a worst-case scenario for consumers and businesses.

According to Connor Campbell, financial analyst at SpreadEx, the latest weakness in Sterling is largely due to comments from UK Prime Minister Theresa May:

‘Theresa May, who’s been boogieing in South Africa, is responsible for the drop, worrying investors by claiming that she thinks a ‘no deal’ Brexit ‘wouldn’t be the end of the world’,

The talk of Britain leaving the EU without an agreement has become louder and louder in the last couple of weeks, with the PM doing little to calm the market’s fears on this front.’

Canadian Dollar (CAD) Exchange Rates Bolstered on Hopes for Canada to Join US Trade Talks

The biggest market news so far this week, has been the announcement that the US and Mexico had agreed to a new trade deal. The US and Mexico had been undergoing trade talks without Canada in recent weeks.

As US-Mexico trade talks appeared to wrap up optimistically, Canadian Dollar investors are excited that Canada could soon be part of a deal to overhaul the North American Free Trade Agreement (NAFTA).

Canadian Dollar investors were especially bullish on Tuesday, after US Treasury Secretary Steven Mnuchin said that the US could reach a new trade agreement with Canada as soon as this week.

Still, uncertainties remained which prevented the Canadian Dollar from pushing GBP/CAD to worst 2018 levels.

Mnuchin also said that if a deal between the US and Canada is not reached, the US and Mexico would continue with a separate trade agreement that did not include Canada.

Pound to Canadian Dollar Forecast: Canadian Data and Trade Developments to Drive GBP/CAD

Canadian Dollar movement is likely to remain highly volatile towards the end of the week, as investors anticipate both major Canadian ecostats as well as potential developments in US-Canada trade relations.

Thursday will see the publication of Canada’s Q2 Gross Domestic Product (GDP) growth rate figures, as well as growth data from June.

These highly influential stats could influence Bank of Canada (BoC) interest rate hike bets if they surprise investors, but major US-Canada trade developments could prove even more influential.

If Canada is able to reach some kind of deal in trade negotiations with the US and Mexico, then GBP/CAD could have even lower to fall in the coming week.

On the other hand though, the Canadian Dollar could see major losses and shed most of its recent gains if trade talks between Canada and the US appear to collapse.

As for the Pound, ‘no deal’ Brexit fears seem likely to keep dominating Sterling movement.

The Pound may not strengthen much even if the Canadian Dollar plunges, as uncertainties about how the Brexit process will unfold continue to dominate the Pound to Canadian Dollar (GBP/CAD) exchange rate outlook.