GBP/CAD Exchange Rate Edges Higher as Downing Street Makes Brexit Concession
The Pound to Canadian Dollar (GBP/CAD) exchange rate rose by 0.3% today, with the pairing currently trading around CA$1.705.
Sterling rose today following comments from Michel Barnier, the EU’s Chief Negotiator, which indicated that the UK and the EU could reach a Brexit trade deal in a matter of days.
This comes after Prime Minister Boris Johnson made a concession on a key ‘evolution clause’, which means that both sides can progress in trade negotiations.
However, Mr Barnier also warned that an agreement pathway remained ‘very narrow’.
As a result, Pound traders are remaining cautiously optimistic about progress in UK-EU trade talks.
In UK economic news, today saw the release of October’s ILO Unemployment Rate, which rose by 4.9%.
Julian Cox, an employment law specialist at BLM, commented:
‘Even with furlough payments still available until March, today’s ONS figures show how the pandemic has played havoc with so many people’s livelihoods. With much of the country in, or about to enter, tier three, these restrictions will only cause further devastation as staffing requirements continue to see a downward trend, particularly in the hospitality and retail sectors.’
Nonetheless, with the UK economy expected to recover following the rollouts of Covid-19 vaccines, GBP investors are becoming more hopeful about the British economy.
Canadian Dollar (CAD) Dips Despite Firming Oil Prices
The Canadian Dollar (CAD dipped against Sterling today despite firming oil prices boosting the commodity linked ‘Loonie’.
Amrita Sen, the co-founder of Energy Aspects Ltd, commented:
‘Oil is the cheapest of all reflation assets. With vaccines slowly rolling out, we expect investors to start returning to the oil sector and for prices to continue firming.’
In Canadian economic news, today saw the release of the latest Manufacturing Sales for October, which fell below forecasts to 0.3%.
Statistics Canada said in its press release:
‘Manufacturing sales in constant dollars were unchanged, indicating that the increase in October was driven entirely by higher prices.’
CAD traders will also be awaiting this evening’s speech from the Bank of Canada’s (BoC) Governor, Tiff Macklem.
Any downbeat comments about Canada’s economy would be CAD-negative.
GBP/CAD Outlook: Brexit Developments and UK Services PMI in Focus
Pound (GBP) investors will be awaiting tomorrow’s release of the flash UK Services PMI for December.
Any improvement in the UK’s largest economic sector could further boost the GBP/CAD exchange rate.
However, Brexit will remain in focus this week, with any signs of a possible trade deal between the UK and the EU being Pound-positive.
Canadian Dollar (CAD) traders will be eyeing tomorrow’s publication of the BoC’s Consumer Price Index.
If this shows a further setback to the Canadian economy, then we could see the CAD/GBP exchange rate suffer.
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