The Canadian Dollar is being boosted by the latest developments and sanctions imposed by the US on Iran. The price of oil is rising which his generally a good sign for the Canadian Dollar. These sanctions will take effect in November so there is still likely to be a choppy period ahead especially if the situation escalates or retracts.
The Pound has fallen lower against the Canadian Dollar with rates for GBP CAD having briefly broken below 1.68 today. Much of the recent decline stems from the Brexit headlines and commentary from both Bank of England Governor Mark Carney and Trade Secretary Liam Fox. Mark Carney stated last week that the risk of a no deal Brexit was uncomfortably high whilst Liam Fox has suggested there is now a 60% chance of there not being a deal between Britain and the EU. Whilst Parliament is closed for the summer recess the Pound has been left on a low note and we may have to wait until the end of the summer before any new direction on Brexit materialises.
The Bank of England may have raised interest rates last week (which would normally result in a rally for the Pound) but there are still considerable concerns over Brexit which is stopping the investment coming into the UK and propping up the Pound in this period.
The focus is now on Friday’s UK Gross Domestic Product (GDP) data for the second quarter which will be eagerly awaited by the markets. If there is a reduction in GDP down to 0.1% from 0.2% as expected then there could be a drop lower in the price of Sterling. However any pick up on Friday could help support GBP CAD rates.
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