The Canadian dollar faces an uphill battle at the moment with the ongoing dialogue from US President Donald Trump. Trade policy changes from the Trump administration are having a negative impact on the Canadian dollar as new tariffs and protectionist policies have started to be introduced. It all started with softwood lumber last year when the US President slapped on tariffs onto Canadian exports.
More recently and the US has introduced tariffs on imported steel and aluminium which also has a knock on effect on the Canadian dollar. Donald Trump is expected to announce new tariffs on imported goods later this week rather than just on raw materials and this could have negative impact on the Canadian dollar also. The Canadian dollar could come under another wave of selling pressure if the protectionist policies are seen as being negative for the Canadian economy. Of course the NAFTA agreement is also being negotiated and until that is concluded the loonie is likely to remain under pressure. Any weakening of Canada’s trading position with both the US and Mexico is likely to have a negative impact on the Canadian dollar and see the dollar weaken.
GBP CAD has risen sharply this week after an agreement on a transitional arrangement has been agreed between Britain and the EU. This has been received extremely well by the markets with gains across the board for sterling exchange rates. Rates for GBP CAD have broken through 1.83 and the pound is currently looking quite well supported against the Canadian dollar. The Bank of England meet tomorrow where no change is expected in terms of an interest rate increase although any clues to suggest that there will be a hike in May could see the pound rally further.
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