The pound has rallied higher against the Canadian dollar taking levels for the GBP/CAD pair to a high of 1.72 first thing this morning.
Pound to Canadian dollar rates have been able to push higher on continued optimism for a deal on Brexit between Britain and the EU. The markets are still awaiting news of an emergency summit to take place in November and if confirmed this could result in further gains for the pound against the Canadian dollar. Brexit negotiations are reaching the final stages ahead of Britain officially withdrawing from the EU in March 2019. Brexit news in these coming days and weeks should prove to be the single biggest driver for sterling exchange rates not just against the Canadian dollar but across the board.
Any Brexit deal will need UK Parliament approval
Whilst the pound has seen a bounce higher on expectation that a Brexit deal will be reached there are still a number of hurdles to climb over. Perhaps the biggest obstacle for UK Prime Minister Theresa May will be to push through any agreed deal with the EU through Parliament. If the deal is voted down in the first instance then that could send the pound crashing down. It was reported yesterday that the previous Brexit Secretary David Davis suggested that Parliament probably would vote down the deal which could see a better Brexit deal agreed later.
Oil Prices Fall – The effect on pound to Canadian dollar rates
The Canadian dollar has weakened following the Fed’s guidance last night that interest rates will continue to rise in the US. The prospect of higher interest rates in the US sees the Canadian dollar lose a little ground and the same is also true for the other commodity currencies such as the Australian dollar.
The Canadian dollar has also weakened on the back of falling oil prices yesterday with investors concerned over an increase in supply which is driving the price lower. This is negative for the Canadian dollar due to its status as an oil producer and its significant export market. Whilst the Canadian dollar has been boosted following the USMCA agreement (formally NAFTA) the uncertain landscape in the Middle East which impacts on the price of oil will continue to keep an uncertain outlook for the Canadian dollar.
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