The Bank of England interest rate decision on Thursday afternoon is the main economic event for the UK this week. It is widely expected that the monetary policy committee will vote in favour of keeping interest rates on hold at 0.75%, therefore the actual interest rate decision may not have an impact on pound to Canadian dollar exchange rates.
UK inflation and growth reports expected Thursday afternoon
After the meeting in which the BoE will decide on whether to increase, decrease or leave interest rates as they are the Governor of the Bank of England Mark Carney’s will deliver his speech. This accompanied by the inflation and growth reports are the events to look out for. Personally I expect the Governor to continue to state that Brexit uncertainty is a worry and the Central Bank will react when decisions are made by the Government. For people that are buying Canadian dollars in the short term, I wouldn’t expect this event to help your cause.
Brexit cross-party talks to lead to House of Commons vote
UK Prime Minister Theresa May has continued negotiations with Jeremy Corbyn this week in London. Until now, it doesn’t appear that the negotiations have been worthwhile as they are still in deadlock over the customs union. The leader of the opposition has made it clear that Labour will only support the Government if the Conservatives add a customs union arrangement into the withdrawal agreement. The problem is that this is one of Theresa May’s red lines as she feels that remaining in a customs union means not delivering Brexit. In my view it’s a matter of time until the PM announces that the talks are over between the Conservatives and Labour. Thereafter, I expect her to go back to the House of Commons and ask MPs to vote again on a way forward. If past history is anything to go by, it’s extremely likely the UK will take part in the European elections.
As for the European elections, the Conservatives haven’t started their campaign as they are still stating that they plan to have a withdrawal agreement sorted before the election. The Conservatives instead have been focusing on the local elections. Normally local elections don’t tend to have a major impact on sterling exchange rates, however this election feels different. Media stations continue to report that the UK public have had enough of the way the Government has handled Brexit. If it’s the case that the Conservatives lose many seats to Labour this could give a good indication of how the next election may go, and with the PM struggling to get a deal over the line, could a general election by closer than we think?
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