Sterling has come under further pressure this morning, following Bank of England (BoE) Mark Carney’s Mansion House speech.
Carney declared that the UK isn’t yet ready for an interest rate hike, citing weak wage growth and a growing uncertainty over how Brexit negotiations will play out.
GBP/CAD rates have fallen, with the Loonie gaining almost a cent during Carney’s speech.
Investors had clearly started to factor in a prospective rate hike, with Sterling’s value rising following last week’s BoE Minutes. These showed that two more members had voted in favour of a rate hike, news which immediately helped Sterling make inroads against its CAD counterpart.
Today’s information is likely to dilute any major advances for the Pound in the short-term and a move back towards 1.70 seems unlikely over the coming days.
The Pound was already reeling following the recent disastrous election results and with Prime Minister Theresa May’s Tory government seemingly on the edge of anarchy, where next for the UK economy and the Pound?
With economic data for both the UK fairly sparse this week, it is likely that any media reports regarding the start of Brexit negotiations will be key to both currencies short-term fortunes.
I feel that whilst so much uncertainty hangs over the UK, in terms of how we will separate ourselves form the EU and what deal will remain in place, the Pound is unlikely to sustain any major advances against the CAD.
The current market is so unpredictable that any short-term gains should be considered and any medium to long-term positions should be protected. The CAD itself is not immune, with global risk appetite shrinking commodity based currencies such as the CAD could come under pressure.
With a heavy reliance in the Canadian economy on the export of crude oil and a falling market, the CAD could find life tough going over the coming months.
The truth is that we just don’t know how the UK economy, or the global market will react to the on-going Brexit negotiations and global unrest in the Middle East and beyond. I am advocating to all my clients that they remove as much risk as possible from what has become a disjointed and uncertain market.
If you have an upcoming GBP or CAD currency transfer to make and would like to be kept up to date with all the latest market movements, or simply wish to compare our award-winning exchange rates with your current provider, then please feel free to contact me on 0044 1494 787 478 and ask one of the team for Matt.
Alternatively, I can be emailed directly on [email protected].