Its been a positive week for Sterling, with the Pound gaining over three cents against the CAD during this period.
GBP/CAD reached a high of 1.7188 this morning, with the Pound finding plenty of support over recent days.
Sterling has spiked in line with a more positive outlook, in regards to the current Brexit negotiations. It seems that there is a willingness on both sides to ensure a deal is reached before next March’s deadline, a scenario which the markets have been crying out for. EU Commissioner Michel Barnier believes a deal can be reached in the next 6-8 weeks.
It has been rumoured that an emergency summit is being scheduled for November 13th, so both sides will want a prospective deal to be in place by this juncture, if indeed there is one in the pipeline.
Sterling’s value has been inextricably linked to the markets’ sentiment regarding Brexit and thus any rumours of talks progressing more positively have helped to propel its value higher.
Looking at the CAD, the current uncertainty around a new NAFTA deal with the US is putting pressure on the Canadian economy and sapping investor confidence in the Loonie. Despite the fact an agreement seems beneficial to both sides, until an agreement is reached, the current state of limbo is unlikely to help strengthen the CAD position.
The Canadian economy relies heavily on its exports to the US and abroad, it is essential that a deal is reached. Failure to do this could lead to further trade tariffs being implemented, which would be a major concern for Canada’s export driven economy and ultimately the CAD.
On top of this there has been a rise in Unemployment and growth forecasts have shrunk for 2018. This could heap further pressure on the CAD over the coming days, particularly if Brexit negotiations progress more smoothly from this point, a scenario that is by no means a certainty based on recent history.
If you’d like to discuss the current political factors impacting both Sterling and the Canadian Dollar respecitively, feel free to send me a message using the form below, I’ll be more than happy to get in touch and discuss your queries.