GBPCAD has received a welcome boost since the start of October as there has been positive developments with regards to Brexit negotiations. Last week Donald Tusk and Michel Barnier both confirmed a Brexit deal is looking more likely.
Reports are suggesting that Theresa May plans to change her ‘back stop’ agreement, which will mean the UK will stay in a temporary custom arrangement with the EU once the UK departs in March 2019. Great news for the Irish border as goods and services as well as people can pass freely.
The problem Theresa May is facing comes from hard-line Brexiteers. A report by Reuters this morning suggests that 40 of the Prime Minister’s lawmakers plan to vote down the new plan. If this occurs then Mrs May would have to get the support from Labour and realistically this is very unlikely to happen.
Jeremy Corbyn will be licking his lips. If May doesn’t get the support from her party or Labour, I find it difficult to see her next step. Unfortunately for the PM I expect a resignation would follow and therefore the pound would suffer.
It’s very difficult to predict what is going to happen next and that is the problem for people converting GBPCAD. My personal opinion is that Theresa May will eventually secure a deal in November and therefore the pound will strengthen. However if the Reuters article comes to fruition and the Conservative Party fail to back the PM, sterling could come under severe pressure.
In other news the UK are set to release their latest GDP numbers tomorrow morning. A small decline is expected which could halt the good run the pound has had against the Canadian dollar since the start of the year.
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