Pound Canadian Dollar (GBP/CAD) Exchange Rate Muted as PM ‘Very Confident’ MPS Will Back Deal
The Pound Sterling Canadian Dollar (GBP/CAD) exchange rate was left muted and the pairing is currently trading at around CA$1.6923.
The Pound was left flat at the end of the week after the UK and European Union agreed upon a new Brexit withdrawal agreement.
Sterling was left under pressure as Boris Johnson still needs to secure the support of parliament when the House of Commons sits on Saturday for another ‘meaningful vote’.
The Prime Minister has insisted he is ‘very confident’ that MPs will back his Brexit deal tomorrow despite the position of the Democratic Unionist Party (DUP).
Commenting on this, general manager of the research department at Gaitame.com Research Institute, Takuya Kanda said:
‘Assuming we clear the parliamentary hurdle, the Pound has room to rise further because there are a lot of shorts to be unwound.
‘But after that, people will start to question whether this is really good for Britain’s economy, and further gains in Sterling could become difficult.’
Oil Prices Slump as China’s GDP Plummets to Weakest Level in Close to 30 Years
Friday saw oil prices fall due to increased concern for demand after the world’s largest oil importer suffered from its weakest quarter of economic growth in close to three decades.
Lower oil prices left the oil-sensitive ‘Loonie’ under pressure over the course of the week.
As the trade dispute between China and the United States has dragged on for over a year and factory production has softened, China’s Q3 GDP slowed to a 27 and a half year low of 6% growth.
Commenting on this, OANDA senior market analyst for Asia Pacific, Jeffrey Halley said:
‘The [China] GDP print has weighed on short-term sentiment and we have seen regional stock markets and oil contracts edge lower because of that.’
Further downward pressure came from US crude oil stockpiles jumped last week as refinery output slipped to a two-year low.
In a research note, ANZ Research said in a note:
‘Concerns about softer growth in the demand for oil and doubts about OPEC’s ability to rebalance the market on the current production rate will be key drags on prices in the near term.’
Canadian Dollar (CAD) Left Flat as Canada Adds 28,200 Jobs to Economy
The Canadian Dollar was left muted on Friday morning after payroll provider ADP revealed that Canada only added 28,200 jobs to the economy in September.
The increase in employment was led by the trade, transportation and utilities sectors, commenting on the data, VP and co-head of ADP Research Institute, Ahu Yildirmaz said:
‘September’s softer gain reflected job growth increase in ‘trade, transportation and utilities,’ combined with ‘professional/business services.
‘While most industries saw minor to modest improvements, construction and information saw notable declines.’
Meanwhile, August’s data was upwardly revised from 49,300 to 109,900 which likely limited losses for the ‘Loonie’.
Pound Canadian Dollar Outlook: Will GBP Plummet Following PM’s ‘Meaningful Vote’?
Looking ahead to this evening, the Canadian Dollar (CAD) could slide against the Pound (GBP) following a speech from the Bank of Canada’s (BoC) Deputy Governor Timothy Lane.
If Lane mentions monetary policy and his tone is overly dovish it could dampen sentiment in the ‘Loonie’.
Meanwhile, it is likely Brexit will be the main catalyst for movement of Sterling as the UK hurtles closer to the 31 October deadline.
If MPs vote against the Prime Minister’s deal during Saturday’s ‘meaningful vote’, it is likely this will offset a dovish BoC and cause the Pound Canadian Dollar (GBP/CAD) exchange rate to slump.