The Canadian dollar has strengthened this week due to the rise in oil prices and speculation that the federal reserve could cut interest rates in the near future. Fed Chair Jerome Powell stated that the ongoing trade war is a concern and monetary policy may have to change. With interest rates now likely to be cut this could continue to help commodity currencies and as the Canadian dollar relies so heavily on oil, it’s no surprise the pound to Canadian dollar rate has fallen.
UK politics weigh on pound to Canadian dollar rate
Another reason the pound has lost value against the Canadian dollar is due to political events in the UK. Now that we need a Tory leadership contest is on the horizon and Theresa May won’t see it through until the UK start its departure with the EU, the uncertainty has weighed on sterling’s value. Andrea Leadsom, a candidate to take over from Theresa May made headline news yesterday when she announced that the UK will need to pay the full €36bn if the UK fail to secure a deal with the EU.
Pound to Candian dollar forecast
Looking ahead the ongoing Brexit story I believe will be the main driver for pound to Canadian dollar exchange rates. I believe it’s extremely likely that a Brexiteer will take over at No10 and therefore the UK will change its approach in regards to the Brexit negotiations. This could go one of two ways. The EU reopens the negotiations which could provide a boost to the pound or the EU to announces that come the end of October the UK will leave the EU without a deal.
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Key economic data
In other news the UK are set to release their latest Markit Services PMI this morning. A slight rise is expected which may start the pound on the front foot for the day. The key data release this week for Canada is the latest import and export data released tomorrow afternoon and Unemployment numbers released Friday afternoon.