The pound to Canadian dollar exchange rate has been boosted as the overall outlook on Brexit in the UK starts to look more optimistic, for the time being at least anyway. Ever since UK Prime Minister Theresa May indicated that she would allow a vote in the House of Commons for an extension of Article 50, we have seen considerable gains for the GBP to CAD pair.
GBP CAD is now trading close to 1.75 creating a good buying opportunity for those looking to buy Canadian dollars. Brexit will almost certainly remain the main driver for the GBP vs CAD pair, and the next two weeks will be crucial as negotiations continue between UK and EU leaders. The markets are awaiting news with regards the legal codicil which will tackle the contentious Irish backstop and also the so called Malthouse Compromise, which too may bear fruits.
The meaningful vote in Parliament will now be held by 12th March, and is the major focal point. Those looking to buy or sell Canadian dollars would be wise to plan around this event as there could be major market movement on that outcome. Failing that, another vote will held the following day on whether MP’s would support leaving the EU without a deal ahead of a further vote for a proposed extension of Article 50 to delay the leaving date. Whether or not that would be agreed by the EU remains to be seen and the length of time would in my view become contentious, creating further uncertainties for GBP CAD.
The pound has also been boosted by the renewed confidence in the British economy. It has been reported that Norway’s sovereign wealth fund worth $1 trillion – the world’s largest – is planning to increase its investments into the UK. Any further investment into the UK is welcome news for the British economy and should help support the pound going forward.
Meanwhile in Canada, the Canadian dollar has found some support as oil prices continue to rally. It would also appear that the oil is starting to have a bigger impact on the strength of the Canadian dollar so expect more movement depending on how that oil price fluctuates.
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