Pound to Canadian dollar outlook before European elections

Pound to Canadian dollar outlook before European Elections

The pound to Canadian dollar exchange rate looks set for a volatile few weeks following a dispute over trade between China and Canada as well as the ongoing Brexit deadlock in parliament.

Trade troubles with China

The Canadian dollar could come under considerable pressure after a row has broken out after China has banned Canola oil shipment on contamination claims. The Canadian Ambassador has requested an investigation whilst requesting proof of the allegations. The fear for the Canadian economy is that other products may be targeted to include maple syrup as well as Canadian seafood. China is a huge export market for Canada and so as a commodity currency the Canadian dollar could be adversely impacted by any other future negative developments on trade.

Canadian house and labour markets

Housing data from Canada is released today which could help direct the loonie. House prices have been stabilising since last year and any change today could help see some market reaction. Canadian employment data is released on Friday and could also help drive the dollar. There are labour market concerns at present after what was a strong labour market last year. However since the end of last year the trend has been reversing and the markets will be looking for any signs of a slowdown.

GBP/CAD forecast

Rates for GBP to CAD are likely to see considerable volatility ahead of the European elections which have been confirmed to be taking place on the 23rd May. Although the government had not wanted to take part in these elections considering Britain will be leaving the EU, the legalities in the treaties mean that Britain will have to take part knowing that any elected MEP’s may not make it to Brussels.

There is a huge amount of pressure on Prime Minister Theresa May at present to the extent that she has signalled her departure from office once the first phase of the negotiations have been concluded. Deadlock remains in parliament and until a solution can be found that commands a majority in the House of Commons the pound is likely to remain under considerable pressure. A move from the traditional parties in the UK to the Brexit Party for example could put pressure on GBP vs CAD and is a hugely important event to be marked in the diary.

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.