Over the last 4 weeks the pound has declined against most major currencies, including the Canadian dollar. In 4 weeks, mid market exchange rates have dropped 3 1/2 cents making a $300,000 Candadian dollar purchase £4,400 more expensive. The pound has been declining ever since the UK accepted the 6 month extension of Article 50. This just shows UK businesses are crying out for certainty and a 6 month extension could be damaging to UK economic data.
However Canada has problems of it’s own. This week the Canadian dollar fell to a three month low against the US dollar after the Bank of Canada cut their plans for future rate hikes due to the global slowdown. The Central Bank also reduced its growth outlook for the remainder of the year. Looking ahead, policymakers have stated that they will monitor energy prices, global trade policy and household spending in a bid to gauge the outlook for future growth and inflation, which will then determine the direction of monetary policy. Now that growth forecasts have been cut and no interest rate hikes are predicted, the question is whether the pound will recover against the Canadian dollar? Personally I think not.
UK Prime Minister Theresa May continues to negotiate with the leader of the opposition Jeremy Corbyn, however little progress appears to have been made. The labour leader is continuing to state that a customs arrangement is a must, but this is a red line the PM is not prepared to cut. In my view it’s only a matter of time until the PM announces that the negotiations between the two leading parties have reached deadlock and they are now seeking alternative arrangements. If this materialises I expect the pound will continue to decline against the Canadian dollar and mid market rates will fall towards the lower 1.70s or even the higher 1.60s.
For people that are emigrating to Canada in the short term, I believe the ongoing Brexit saga is a major concern. As I don’t believe a solution will be found before the European elections, I expect the pound will continue to decline against the Canadian dollar, therefore buying Canadian dollars sooner rather than later seems a sensible option. If you are looking to buy Canadian dollars and would like a quote, feel free to fill in the form below.