GBP/CAD rates have fallen during Friday morning’s trading, with the Loonie finding plenty of support around 1.75.
With an improvement of almost a cent back towards 1.74, it seems as though Sterling’s positive spike from earlier this week may be cooling.
In truth the Pound had made inroads despite the UK’s Brexit positon remaining clouded in uncertainty. It seems as the markets are being driven for the most part, by the fear of the UK ending up in a no-deal scenario come the March 29th deadline.
The potential negative impact a no-deal would have on the UK economy was reiterated by UK Chancellor Philip Hammond, who claimed it would cause “significant disruption” for the UK in the short-term, whilst the economy would take a “significant hit” in the medium to long-term.
The Chancellor also refused to rule out quitting his post if the UK did leave without a deal and also stated that the potential impact of a no deal is “not what the people voted for”.
Whether this is a likely scenario or not, it seems that whilst there is even an outside possibility of it occurring the market will continue to adjust its value accordingly.
Looking at the Canadian economy and this has also faced a number of problems of late. Despite a more positive outlook following the re-negotiation of the old Nafta agreement last year, the Canadian economy has failed to kick on as many had hoped.
With oil prices falling back towards the 2017 lows and a general slowdown in the global economy, the CAD has faced an uphill battle in truth. Being a commodity-based currency it relies heavily on global growth to drive investors risk appetite, which usually leads them back to what are considered riskier currencies, such as the CAD. With Canada one of the globes largest exporters of crude oil, the recent fall in oil prices was always going to negatively impact the CAD’s value.
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