With GBP/CAD trading at a 3 year low around the 1.61 mark and a number of issues, mostly Brexit related, applying pressure to the Pound I think it’s likely that we’ll see further Sterling weakness as opposed to a recovery.
With numerous prominent European figures coming out and reiterating their preference for a ‘Hard Brexit’ whereby the UK loses access to the single market, and the EU’s policy of free movement of people isn’t affected, the likelihood of a sudden Sterling rebound is becoming all the more unlikely in my opinion.
There are a number of economists and analysts expecting further falls in the Pounds value next year against a range of other currency pairs, and I think that those forecasts are based off of the issues the UK economy is likely to face.
One of those is Inflation, and today we’ve been provided with an insight of what’s likely to come as the weaker Pound is likely to drive up UK Inflation levels to what could become unhealthy levels.
On the Canadian side commodities are on the incline, with oil in the news often after recently hitting a 52 week high which impacted the CAD positively. Aside from the buoyancy towards the currency due to it’s commodity currency status the underlying fundamentals have given the Bank of Canada little to be concerned about when we compare the economy with many other major economies. It’s for these reasons that I’m expecting further falls for the Pound between the GBP/CAD pair.
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