With Donald Trump having won the US Presidential election, GBP CAD exchange rate forecasts now revolve around his attitude to international trade.
GBP CAD Long-Term Exchange Rate Forecasts to Receive Boost from Trump Favour?
Pound Canadian Dollar exchange rates have already received a boost from expectations the UK will be able to jump the queue when negotiating a trade deal with the US. Donald Trump had previously stated that he would prioritise the UK during the campaign, while post-election comments from his trade advisor have further fuelled hopes. This could help to smooth over the UK’s Brexit process if a fresh deal can be struck with a major trade partner quickly.
Further talk of trade relations between the US and the UK is therefore likely to bolster GBP CAD long-term exchange rate forecasts further. However, being able to negotiate a potentially lucrative deal with the US may give the government fresh confidence to proceed with its ‘Hard Brexit’. Whether or not markets expect US trade to be able to adequately soften the blow of leaving the single market will be vital in determining GBP CAD long-term exchange rate forecasts.
CAD GBP Exchange Rates Forecast to Slump as Markets Fear Protectionist Trump
While the Pound may be boosted by market speculation over Trump’s trade policies, the Canadian Dollar is weakened because of it. Contrary to his stance on the UK, the President elect is seen as fiercely protectionist, which could spell trouble for the Canadian economy. Trump has been extremely critical of the North America Free Trade Agreement (NAFTA), signed by the United States, Canada and Mexico.
A potential end to NAFTA could severely harm the Canadian economy. According to the Canadian government;
‘Since 1994, NAFTA has generated economic growth and rising standards of living for the people of all three member countries. By strengthening the rules and procedures governing trade and investment throughout the continent, NAFTA has proven to be a solid foundation for building Canada’s future prosperity.’
Since NAFTA was signed, trilateral trade with North America more-than-tripled from US$288 billion to US$1 trillion. The prospect of worsening Canada-US trade relations is therefore weighing on investor sentiment and further supporting GBP CAD long-term exchange rate forecasts.
Interbank GBP CAD Exchange Rates
At the time of writing, the Pound Canadian Dollar (GBP CAD) exchange rate was trading in the region of 1.70, while the Canadian Dollar Pound (CAD GBP) exchange rate was trending in the region of 0.58.