The UK is on the brink of officially starting Brexit proper; once this process begins, the Pound may be in for two years of turbulence against the Canadian Dollar, depending on how negotiations with the EU proceed.
The exact tone of communications between UK and EU officials during the great separation can only be speculated on at present, though there are still some aspects to watch out for when it comes to Pound-influencing developments.
Offering a forecast on Brexit talks has been Financial Times Chief Foreign Affairs Commentator Gideon Rachman. Rachman has stated that both sides are ‘talking tough’, with the prospect of a hefty parting sum being required from the UK threatening to hold up any possible future trade deal. On the odds of this issue scuppering negotiations entirely, Rachman has been ambivalent;
‘There is a high chance that the money issue will cause negotiations to break down. However, it is also possible that both sides are bluffing and will back off’.
In the early stages of negotiations, if it looks like talks are off to a shaky start then the Pound may drop considerably against the Canadian Dollar. If both sides agree to some fundamental concessions, however, such as securing citizens’ rights and laying the groundwork for a post-Brexit trade deal, then the Pound may appreciate on hopes that the rest of negotiations will proceed in an equally amendable fashion.
For the Canadian Dollar, the latest CAD GBP movement has been negative on account of further drops in the price of crude oil, a nationally important commodity.
The cost of crude in the future and by extension the value of the Canadian Dollar will be largely determined by the recorded supply of crude oil, as well as any efforts that are made to control this supply.
The latest drops in crude oil prices have come from an excess in the United States and crucially, the US is not a member of the Organisation of the Petroleum Exporting Countries (OPEC). Flying further from any OPEC moderation, President Trump has voiced plans to reopen oil drilling in Alaska and has more recently approved plans to build a pair of lengthy and production-boosting oil pipelines.
Given the US’s current push to barrel and send oil en masse, the Canadian Dollar may be in for further losses against the Pound in the future if the cost of crude oil sinks further on such US actions.
Recent Interbank GBP CAD Exchange Rates
At the time of writing, the Pound to Canadian Dollar (GBP CAD) exchange rate was trading at 1.64 and the Canadian Dollar to Pound (CAD GBP) exchange rate was trading at 0.60.
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