GBPCAD exchange rates hit a 1-month high

GBPCAD Exchange Rate on the Rise with Brexit Party Ruling Out Tory Seat Contention

The Pound to Canadian dollar has hit a 1-month high, as the chances of a ‘no deal’ Brexit appear to be diminishing, and the chances of an extended Brexit or Article 50 period increase. The Canadian dollar has also been weaker as the price of Oil fell sharply towards the end of 2018, plus uncertainties in the US economy are weighing on the North American region.

I expect the pound to remain buoyant as the market prepares itself for a series of votes on Theresa May’s deal which might still receive Parliamentary approval, or lead to some votes which will remove the ‘no-deal’ option or seek an Article 50 extension.

The pound could however still face some serious setbacks as investors debate the potential for more negative outcomes in the future. Being forced to consider the potentially negative outcomes which still remain on the table, the pound could suffer and face a sharp fall.

On the Canadian dollar side it is expected that the ongoing Government shutdown will only cause more troubles for the US economy in 2019, which is likely to hamper the Canadian economy, due to its heavy reliance on trade with the US.

Other concerns on the US side include the global trade wars instigated by Donald Trump which have seen the global economy come under scrutiny and commodity currencies like the Loonie suffer.

The Canadian economy relies heavily on its Oil exports and also the export of other materials like lumber, so reduced global demand for these products will negatively effect the Canadian economy and should see the CAD weaker.

Overall, it’s tempting to foresee a much stronger pound but many risks still lie ahead. The weakness of the Canadian dollar should however help to keep this rate in the 1.70’s, with the potential for any better news relating to the pound to help the pair drive higher.

Clients with a position buying or selling the pound against the Canadian dollar would do well to take stock of the current market and events. If you are considering any transactions in the future, we would be keen to hear from you and provide the latest news and updates.