Trump could cause volatility on GBP/CAD (Daniel Johnson)

Pound to Canadian Dollar Outlook: BoC Interest Rate Cut Bets Soar as Oil Prices Sink CAD

Trump causing trouble promising to increase oil production

Trump’s speech following the inauguration was very focused on taking firm control of the domestic economy. Part of the plan for Trump’s “Let’s make America great again!”

If his plans come to fruition the Canadian Dollar could lose value. I think Sterling is still chronically undervalued against the Canadian Dollar. The main factor for the pound’s fall is the uncertainty surrounding trade negotiations post Brexit vote. Sterling has rallied following Theresa May taking away some of that uncertainty following her Brexit plan speech last week.

75% of Canada’s trade is with the US, any change in trade could be very detrimental to Canada. Trump has mentioned his intention to increase oil production in the US. Canada’s main export is oil so the ramifications could be severe if Trump gets his way. Tim McMilan, thhe president of of the Canadian association of petroleum producers made clear the potential problems Trump’s plans could cause for Canada.

Justin Trudeau the acting Prime Minister has made a point of reassuring investors about the state of trade relations with the US and issues with the North Atlantic free trade agreement. The US president recently stated his intention to screw up the deal and renegotiate making sure the US’s needs were at the forefront of negotiations.

Supreme Court Ruling to affect GBP/CAD

If you are trading GBP/CAD keep a close eye on the exchange tomorrow as the supreme court ruling on whether parliament will get to vote on the triggering of article 50 is due to be announced. I think it is more likely parliament will get the opportunity to vote, which way Sterling will go however will be difficult to judge. A soft Brexit would be considered the safer option for the UK economy and is the likely outcome if parliament do get to vote.

However, this would go against Theresa May’s intentions and would add more uncertainty as to the UK’s exit, if there is one thing the markets do not react well to it is uncertainty.

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Daniel Johnson