The pound to Canadian dollar could be in for some tricky times as investors await the latest stages and news on Brexit, while remaining concerned over the outlook on Brexit. The future is looking less certain for the global economy and what lies ahead; the market is bracing itself for some big changes in the future.
Brexit is still undecided, which is impacting the value of the pound, whilst the trade Wars and also the uncertainty of the outlook on the global economy is driving the price of Oil and also the commodity currency, the Loonie dollar.
Despite the uncertainty over Brexit, GBPCAD levels have risen to a near 1-year high, the best time since April ’18 to buy Canadian dollars with pounds. This is a reflection of the optimism over Brexit, plus a lower Oil price which has seen the commodity dependent Canadian dollar lose ground.
Worse than expected Gross Domestic Product (GDP) data released on Friday last week was also a contributor to the malaise on the Canadian currency which could well lose further ground ahead if the market believes interest rate hikes are now significantly less likely in the future.
GBPCAD levels are very sensitive to global issues as mentioned above and could easily find some piece of news to warrant a pullback into the mid or lower 1.70’s, particularly if some unexpected Brexit news hurts UK sentiment.
Next week we should see the all-important parliamentary vote on Theresa May’s final meaningful vote on her Brexit plans, which could present some good opportunities for clients looking to buy or sell the pair.
My personal view is that the more MP’s supporting Brexit will do everything in their power to get Mrs May’s deal through as the alternative could be no Brexit at all. This should see the pound strenghten although the path to this point will not be straightforward.
If you have any GBPCAD exchanges to consider, I would be interested to speak with you to provide some information and insight as to the factors that could impact your currency exchange in the coming weeks.