Pound to Canadian Dollar Exchange Rate nearer Weekly Lows after Brexit Delay News
After the Pound’s (GBP) relatively bullish performance for much of last week, the British currency has weakened since yesterday on UK politics and the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate has tumbled.
Last week saw GBP/CAD surge from 1.6700 to 1.7036 on Brexit deal hopes. However, while GBP/CAD briefly touched on a four-month-high of 1.7052 on Monday the pair has since shed around half of last week’s gains.
At the time of writing on Wednesday, GBP/CAD is trending close to the level of 1.6834, having lost around two cents from the week’s opening levels already.
While the Pound’s losses are limited amid lightened no-deal Brexit fears, the British currency could weaken further if a general election becomes more likely.
Pound (GBP) Exchange Rates Tumble as Brexit Delay Could Mean General Election
While a new UK-EU Brexit deal was finally reached last week, much of the market’s bullish momentum from that news has already faded.
UK Prime Minister Boris Johnson attempted to fast-track his deal through parliament this week, but parliament blocked the fast-tracked timetable, citing needing time to scrutinise the new plan.
As the plan will likely not be accepted by the current 31st of October Brexit deadline, expectations are rising that the EU will grant Britain another Brexit extension.
However, a potentially long extension means a longer period of Brexit uncertainty.
Market anxiety about a UK snap election being possible after the delay is making investors hesitant to buy Sterling, amid fears that Britain’s political outlook could change even further at this point in the Brexit process.
Canadian Dollar (CAD) Exchange Rates Firm as Oil Prices Rise
The Canadian Dollar (CAD) has seen fairly strong movement this week so far. The currency saw vague relief at the results of Canada’s Federal Election, amid hopes for continuation from the Liberal Party, which managed to hold onto power.
Demand for the Canadian Dollar saw a more solid boost yesterday though, when prices of oil, Canada’s most lucrative commodity, rose for the first time since last week.
Oil prices advanced on a combination of perceived progress in US-China trade negotiations, as well as signs that OPEC and other oil-producing nations were considering even deeper oil production cuts in order to stimulate prices.
This helped the Canadian Dollar to hold its ground, even as yesterday’s Canadian retail sales results from August disappointed.
Pound to Canadian Dollar (GBP/CAD) Exchange Rate Outlook Depends on Election Likelihood
With another Brexit delay of multiple months looking increasingly possible, the Pound to Canadian Dollar (GBP/CAD) exchange rate outlook could change depending on how UK politics could change in this new period of uncertainty.
Britain’s major parties want a general election, but opposition parties would prefer for a Brexit delay to be confirmed before they agree to an election.
If a Brexit delay is confirmed soon, this may weaken no-deal Brexit fears and the Pound (GBP) could see solid support as a result.
However, if a general election is confirmed as well, the British currency is likely to become increasingly jittery again on political uncertainty.
The Canadian Dollar, on the other hand, will be influenced by upcoming Canadian wholesale sales data from August today.
Any notable shifts in US-China trade relations or oil prices could also influence the Pound to Canadian Dollar (GBP/CAD) exchange rate outlook.