Pound Canadian Dollar (GBP/CAD) Exchange Rate Falls as ‘Big Gap’ Remains Over Customs Arrangements
The Pound Sterling Canadian Dollar (GBP/CAD) exchange rate slumped and the pairing is currently trading at around CA$1.6597.
The Pound was left under pressure as the UK and EU are set to meet later on Monday to attempt to reach a deal before a crunch summit later this week.
Following discussions in Brussels over the weekend, European Union ambassadors were told the UK would make concessions regarding the Northern Irish border.
However, EU chief negotiator, Michel Barnier said ‘a big gap’ remained over customs arrangements, which likely left Sterling under pressure against the ‘Loonie’.
Meanwhile, Home Office Minister, Victoria Atkins said that she believed a Brexit deal could be reached by the Halloween deadline.
Speaking to BBC Radio 4, Atkins said:
‘[In] the last few days, we’ve seen a real shift in approach from the EU – and in Ireland in particular – for which we’re extremely grateful and appreciative.
‘I think with the negotiations ongoing […] I’m an optimist, I do believe that we can get a deal by 31 October.’
Canadian Dollar (CAD) Rises despite Growing US-China Trade Deal Skepticism
The Canadian Dollar edged up on Monday morning despite an easing of oil prices as little details on the first phase of a US-China trade deal dampened last week’s optimism that helped buoy prices by 2%.
Markets were initially lifted following the emergence of a trade deal between the US and China and a goodwill gesture to suspend threatened tariffs on Chinese goods.
However, markets remained cautious as few details emerged on the talks, and in an email senior market analyst at OANDA, Edward Moya wrote:
‘Oil is slowly giving up its recent gains as mini-trade deal skepticism is growing.
‘Since it will take about a month to finalize this partial deal, traders are remembering that we have seen things fall apart in shorter time periods.’
Pound (GBP) Slips as Brexit Uncertainty Could Hinder BoE’s Ability to Help Economy
On Sunday, the Bank of England’s (BoE) Deputy Governor Dave Ramsden stated he did not agree with some of his colleagues that have suggested if Brexit chaos continues past the 31 October deadline, the bank may be forced to cut rates.
Speaking to The Telegraph, Ramsden said that the economy had been so damaged by Brexit uncertainty that this could hinder the bank’s ability to help it.
He also noted he was cautious about the economy’s growth potential thanks to weak productivity, which contracted at the fastest pace in five years during the second quarter.
Added to this, he noted that global trade tensions were weighing on firms’ willingness to invest, which likely left the Pound under pressure.
Pound Canadian Dollar Outlook: Will UK Wage Growth Buoy GBP?
Looking ahead to Tuesday, the Pound (GBP) could rise against the Canadian Dollar (CAD) following the release of August’s UK unemployment and wage growth data.
If unemployment edges lower than expected and average earnings continue to rise, Sterling is likely to claw back some losses.
Meanwhile, the Canadian Dollar could slip further following the release of August’s new motor vehicle sales.
If sales do not rise as high as expected, it could leave the ‘Loonie’ under pressure, causing the Pound Canadian Dollar (GBP/CAD) exchange rate to rise.