It has become much better for those buying Canadian dollar over the last couple of weeks as lower prospects of a no-deal Brexit have encouraged investors to seek the pound as a longer term investment, with Pound to Canadian Dollar rates near 1-year highs. There is also increased prospects of some kind of Brexit deal being struck, one way or another.
The Canadian dollar has also been slightly weaker as there is less chance of the Bank of Canada seeking to raise interest rates. This is in part because their major trading partner, the United States is also holding interest rates.
This week is a key week for GBP/CAD rates with not only further news on the Brexit, which I expect to be delivered tomorrow or Thursday, but with the US interest rate decision tomorrow evening too.
Later this week on Friday is also the latest news on Canadian Inflation data which is predicted to come in slightly lower, which will only take further pressure off the Canadian bank to hike their base rates anytime soon.
A key factor which could drive the Canadian dollar higher against the pound would be the rising price of Oil which has hit a 4-month high lately, this makes petro-dependent economies like Canada much more attractive to investors.
Overall, the stronger pound is now providing much more buoyancy on the rates and any sign of a deal being struck could see GBP/CAD rates rise above 1.80, or even test the 1.83 highs of April 2018.
I think a deal might be struck on Brexit because it is in the Brexiteer’s interest to get a deal done to avoid the prospect of losing Brexit altogether, and it is in the EU’s interest to strike a deal, since they want to avoid the problems of either a long delay or a no-deal.
GBP/CAD rates currently sit at 1.76-1.77, a fresh high for clients considering a CAD purchase with pounds. We could very easily see this drop should the pound suddenly find itself in trouble again and no-deal begins to look more likely.
Thank you for reading and please contact me using the form below if you wish to run through or discuss the market in what looks likely to be a very busy period for GBP/CAD exchange rates.