CAD moves from strength to strength
The Canadian Dollar continues to strengthen against the pound. There has been a recent rate hike by the Bank of Canada (BOC) from 0.5% to 0.75% and there is the possibility of further rate hikes in the not too distant future. The Canadian economy is currently very strong with positive data across industries. Canada’s primary export, oil is also in high demand following a cull in oil production from Organisation for Petroleum Exporting Countries (OPEC). OPEC have put in place a deal to reduce production which has benefited the Canadian Dollar. It is important to remember that members of OPEC have been known to brake the deal without notice.
If we look at the UK situation it does not bode well for the Pound. Political uncertainty historically weakens the currency in question and at present we have a growing number of Tory MPs attempting to oust Theresa May from her position as Prime minister. Until there is a stable government in place whether it be with or without May the pound stands little chance of any substantial gains.
There is also the small matter of Brexit. There is a complete lack of clarity on how negotiations will progress. In the currency market no news is worse than bad news. We have seen very minor white paper releases in regards to the UK’s stance on Brexit, but unfortunately nothing on the big issues such as freedom of movement of people and trade agreements. This is the fundamental reason for the pound’s problems.
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