The Pound vs the Canadian Dollar is now trading at its lowest level to buy Canadian Dollars since November 2017.
The Pound has endured a very difficult time especially in the last few weeks as the topic of Brexit is still on going. It appears as though the UK is heading towards a no deal Brexit according to Bank of England Governor Mark Carney and UK Trade Secretary Liam Fox.
This uncertainty has weighed heavily on the Pound with Sterling dropping to its lowest level all year against a whole host of different currencies.
The recent UK interest rate hike gave the Pound a very short term boost but the press conference which came shortly afterwards last week was rather dovish and suggests that we should not be expecting more hikes in the near future.
The House of Commons are currently on their summer break so I do not expect to see too much further positive political commentary during this period.
In the meantime the issues between Canada and the US appear to be diminishing and with the value of oil rising, which as Canada’s main export is helping to strengthen the Canadian Dollar vs the Pound.
Indeed, with oil prices rising this will give support to the Bank of Canada to think about increasing interest rates.
The Central Bank expects economic growth in Canada to increase to 2.8% in the second quarter and has already increased interest rates twice since January. They appear to be one of the few economies who are trying to keep up with that of the US.
The main risk to the Canadian Dollar is that of the ongoing NAFTA talks; if these go well we could see further improvements in the Canadian Dollar so make sure you keep a close eye on the discussions over the next few weeks.
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