The Canadian dollar continues to remain on the back foot as uncertainty surrounding NAFTA remains the primary concern for the Canadian economy. The Bank of Canada has raised its concerns over the issue as well and its Governor Stephen Poloz has hinted at not raising interest rates until the future is more clear on this matter of trade.
The Bank of Canada surprised the markets last July when it raised interest rates by 0.25% which was later followed up with another hike in the Autumn. The softer stance coming from the Bank of Canada would suggest that a surprise hike seems out of the question for the time being or at least until the NAFTA agreement has been concluded.
There is pressure from Mexico to try and conclude the agreement before a general election in July and if agreement is reached by this time this should give much more clarity for the Canadian dollar and the currency may start to see some strength on the back of a reasonable deal.
UK Gross Domestic product figures released today fell to a five year low with growth falling to just 0.1%. This is the lowest level seen since Quarter 4 2012 and the numbers are likely to dissuade the Bank of England from raising interest rates at the meeting in May. Sterling dropped sharply across all of the major currencies immediately following the news with rates for GBP CAD hitting a low of 1.78 for the pair. There is currently an excellent opportunity for those clients looking to sell Canadian dollars on the back of the surprisingly weak data.
Rates for GBP CAD have pushed higher in recent months although the pound has come of the highest levels for the pair. UK politics and Brexit in my opinion are about to become major drivers for the price of sterling with important votes in the House of Commons that could change the path of Brexit in one way or another.
Clients looking to buy Canadian dollars may wish to consider taking advantage of these higher levels which are still available and close the highest points. A positive outcome on NAFTA or negative outcome or no deal scenario on Brexit could see rates for GBP CAD fall lower. The combination of the two could see a seismic drop lower for this pair.
For more information on the Canadian dollar and how these events are likely to impact on your own currency transfer then please get in touch with me at firstname.lastname@example.org