GBP to CAD outlook ahead of European elections

Pound to Canadian dollar forecast Are futher falls on the horizon for the pound against the Canadian dollar?

The pound to Canadian dollar exchange rate has moved higher breaking over 1.75 for the GBP vs CAD pair, taking levels close to the recent highs seen at the end of March. Since the beginning the year there has been a difference of around 9 cents from high to low.

UK local election results

Things could have been very different today after the local elections held in the UK yesterday. The results so far have seen losses for the two main parties with both Labour and Conservative losing seats to the liberal democrats.

Losses for the Conservatives were expected to be much heavier, with the less severe outcome supporting the pound. Focus now moves to the European elections to be held May 23rd where the story could be very different. Nigel Farage’s Brexit party is expected to win a huge number of votes which could completely change the political landscape in the United Kingdom. There is likely to be considerable market volatility for GBP to CAD exchange rates if there is a major shift to the Brexit party. In the meantime the Brexit deadlock in parliament is keeping the pressure on the pound and there is likely to be a strong market reaction from any developments or statements made by politicians.

The Bank of Canada released their latest interest rate decision last week where interest rates were held at 1.75%. The central bank has embarked on a rate tightening cycle although with the US now pausing it seems likely that Canada will follow suit. Governor Stephen Poloz will be making a speech on Monday which could help direct the Canadian dollar. With uncertainties in the global economy and an ongoing trade war between the US and China there is likely to less pressure on the central bank to hike rates for the foreseeable future.

Bank of England interest rate outlook

The Bank of England met yesterday and held interest rates as widely expected although the tone coming from Governor Mark Carney was upbeat on the basis of a deal between Britain and the EU. He signalled that interest rates may need to rise faster than anticipated on the back of a good deal which in theory should be positive for the GBP to CAD.

If you would like to learn more about these factors and the impact they could have on your Canadian dollar currency exchange, feel free to get in touch using the form below where you can contact me directly. I look forward to hearing from you.