Sterling has climbed away from last week’s low against the CAD, with the pair once again trading back above 1.70.
This will feel like a small victory for many clients looking to execute a GBP to CAD exchange over the coming days, considering at last week’s low the Pound had fallen below 1.68.
The recovery came in line with Theresa may withstanding a vote of no confidence by her own Tory party. However, with a Brexit deal seemingly no closer and more public spats between the PM and leading Government figures both past and present, I am not anticipating an aggressive increase for GBP to CAD rates as we head towards the Christmas break.
Market confidence in the Pound is ebbing lower seemingly by the day, as investors continue to shy away from the Pound amidst the ongoing
Uncertainty surrounding Brexit
With the prospect of the UK leaving the EU by March’s deadline without a deal being in place growing, there is certainly no guarantee that the pound will be able to hold its position above 1.70 as we head into the New Year.
The difficulties for the Canadian dollar
Looking at the Canadian economy and this is also facing difficulties of its own. Economic forecasts are predicting that the Canadian economy will slow next year, predicting it to fall to 1.9% from the expected 2.1% this year.
A fall in oil prices is having a detrimental effect on Canada’s export driven economy. Canada is one of the largest exporters of crude oil globally, so this drop along with a general slowdown in global trade is causing the Canadian economy to slow, thus weakening the CAD as a result.
It is likely that the CAD’s current value against GBP is being support, at least to some extent, by the growing market concerns regarding how the UK economy will fair post Brexit.
However, if Theresa May does manage to get her Brexit deal with Brussels approved by the House of Commons next month, then I would anticipate a spike for the Pound and we could see a run back towards 1.80 against the CAD.
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