GBP/CAD Exchange Rate Sinks as UK Markets Brace for Brexit News
The Pound to Canadian Dollar (GBP/CAD) exchange rate fell by -0.3% today, with the pairing currently trading around CA$1.720.
Sterling fell against the Canadian Dollar (CAD) today as UK markets are becoming anxious over the lack of Brexit developments. Today will see the UK and Brussels intensify talks in London.
Joe Tuckey, an analyst at Argentex, explains:
‘News that post-Brexit trade talks between the UK and European Union will resume is likely to encourage a continuation of the volatile Sterling trading patterns we have seen on the back of recent news headline flow.’
GBP has suffered from growing uncertainty over whether Downing Street or the EU will compromise on a post-Brexit trade deal.
Michel Barnier, the EU’s Chief Negotiator, has also warned that it is ‘entirely possible that negotiations will not succeed.’
In UK economic news, today will see the release of October’s Consumer Confidence report, which is expected to fall to -28.
Consequently, we could see the GBP/CAD exchange rate fall further because of growing concerns over Britain’s economic future as the winter months fast approach.
Canadian Dollar (CAD) Edges Higher on US Stimulus Hopes
The Canadian Dollar (CAD) benefitted from growing optimism over a US stimulus package being agreed upon ahead of November’s American presidential election.
Analysts at Reuters commented:
‘Progress towards a U.S. stimulus deal has boosted sentiment in world markets and lifted demand for riskier assets in recent sessions.’
The risk-averse ‘Loonie’ has benefited from signs that the US could stabilise despite rising political uncertainties ahead of next month’s election.
Nonetheless, this week’s disappointing Canadian retail sales, which rose by 0.4% month-on-month in August compared to the 1.1% expected rise, weighed on the ‘Loonie’.
Analysts at Bloomberg were also downbeat in their forecasts for Canada’s retail sector, saying:
‘The outlook for retail sales is fairly bleak, with the recent surge in Covid-19 infections forcing some Canadian provinces, including Quebec and Ontario, to tighten up on social distancing measures. Capacity restraints and further shutdowns in the face of a second wave will likely keep a lid on demand.’
GBP/CAD Forecast: Could a Brexit Breakthrough Send Sterling Skyrocketing?
Pound (GBP) investors will be keeping a close eye on tomorrow’s release of the flash UK Services PMI for October.
Any improvement in the UK’s largest sector would provide a boost for the GBP/CAD exchange rate.
Tomorrow will also see the release of the latest UK Retail Sales report for September.
However, GBP investors will be focusing on UK-EU Brexit developments on Friday. If both sides show any compromise on a post-Brexit trade deal, then the GBP/CAD exchange rate will head higher.
Meanwhile, the Canadian Dollar (CAD) will remain sensitive to global risk sentiment into the weekend. As a result, any US political uncertainty or a delay to the stimulus package would prove CAD-negative.