GBP/CAD rates hit a high of 1.7188 earlier today, although the pair have remained extremely flat during Thursday’s trading.
The Pound has seen its recent support soften over recent days, as confusion over the on-going state of Brexit negotiations continues to dominate headlines.
Progress regarding the final figure on the UK’s Brexit settlement (rumoured to be as much as 50 billion Euro) and agreements in principal regarding the Irish border and protection of EU nationals in the UK, were seen as a major breakthrough after months of stagnation.
It seemed as though we were finally seeing the agreement being put in place, which would allow the government and the EU to move onto phase two of the negotiation process. This involved potential restrictions over free movement of people and perhaps most importantly in the eyes of investors, what trade deal the UK would have with its European neighbours.
Whilst this is still being touted as the next step, reports over the past couple of days have indicated that the UK & the EU were not necessarily on the same page. Brexit secretary David Davis indicated in an interview over the weekend that the touted “divorce” bill was not binding and would not be paid if the UK did not receive an advantageous trade deal.
This was widely criticised and rebuffed by key EU figureheads and could put pressure on Sterling over the coming days.
This is even more poignant when looking at the Canadian economy, which seems to be gathering steam. 80,000 new jobs and economic expansion of 1.7% in the last quarter, is likely to boost investors risk appetite in the CAD.
Whilst the Canadian economy relies heavily on the export of crude oil and as such, has seen a downturn over recent months as oil prices have dropped, the economic outlook for Canada is looking far healthier than that of the UK.
As such I would be tempted to take advantage of Sterling current spike, whilst the Pound continues to trade above 1.70 against its CAD counterpart.
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