GBP/CAD Exchange Rate Rallies as Sterling Begins to Claw Back Last Week’s Losses
The start of this week’s session has seen the Pound attempt to claw back some of the losses it made on Thursday following the Brexit chaos.
The Pound Canadian Dollar (GBP/CAD) exchange rate has risen by around 0.5% today as lower oil prices took their toll on CAD.
Adding to the sense of calm in Sterling markets, a Treasury select committee hearing this morning saw Bank of England Governor Mark Carney give his backing to Theresa May’s Brexit deal, although he did warn that a hard break from the European Union would cause the British economy to suffer, saying.
‘We have emphasised from the start the importance of having some transition between the current arrangements and the ultimate arrangements,’
‘So we welcome the transition arrangements in the withdrawal agreement […] and take note of the possibility of extending that transition period,’ he added.
He also stated that interest rates could rise even in the event that the economy takes a dent from a no-deal Brexit.
GBP/CAD Exchange Rate Gains as Brexit Remains in the Spotlight
The possibility of a Brexit transition period extension to 2022 has been proposed by the EU’s chief negotiator, Michel Barnier.
If this were to be accepted it would see the UK bound to follow EU regulations and laws without having a say in the decision making process.
Volatility in Sterling could continue as the threat of a no-confidence vote still hangs over Theresa May, although the forty-eight letters needed for such a challenge have not so far been amassed.
MP Jacob Rees-Mogg the front man of the push that began the letters of no-confidence being submitted, stated that this government made ‘a deliberate decision not to deliver a proper Brexit’.
GBP/CAD Exchange Rate Rises as Oil Prices Fall
The oil-sensitive ‘Loonie’ has dropped as oil prices fall, with Alberta Premier Rachel Notley highlighting the fact that Alberta oil is selling $45 a barrel less than West Texas Intermediate in the US.
Notley stated: ‘We will lose that $80 million tomorrow and the day after and the day after, as long as this price differential remains in place […] Make no mistake, this price gap is a real and present danger to the Canadian economy.’
Furthermore, the US-China trade tensions have caused the Canadian currency to remain muted, as the two superpowers were unable to halt the escalation of tensions at the Asia-Pacific Economic Cooperation (APEC) meeting.
GBP/CAD Exchange Rate Vulnerable to Brexit Pessimism and Hawkish BoC
Fears of there being a no-deal Brexit are still being felt by many with Andy Haldane, the Bank of England’s chief economist, stating that firms are increasingly worried about the prospect, and that it is now hurting investment and likely to drag on growth in this quarter.
What’s more, comments made by Spain over Gibraltar have added to the sense of pessimism, with Gibraltar’s Chief Minister Fabian Picardo accusing Spain of using a ‘well-known tactic’ of raising issues at the last minute as it ‘does little to build mutual confidence and trust going forward’.
Later this evening will see a speech by Carolyn Wilkins, senior deputy governor of the Bank of Canada give a speech, and the tone of her speech, whether it be hawkish or dovish, liable to drive CAD movement.
Friday will see the release of a raft of inflation data from Canada which is likely to cause movement in the GBP/CAD, with any upside surprises liable to put pressure on Sterling.