Brexit Continues to dictate pound to Canadian dollar rate
Sterling value is being predominantly dictated by Brexit. Over the past four weeks the pound has gradually declined in value against the Canadian dollar. The pound could potentially fall further as Brexit limbo and the Conservative leadership contest continue.
There are candidates for the role of PM who have stated they are willing to bring a no deal scenario back to the table. A no deal scenario is the investor’s biggest fear and if the probability of a no deal rises you would expect the pound to weaken. The threat of Britain leaving the EU with no deal is the only ammunition the UK has in renegotiating the deal on the table.
The Labour party is making moves to block a no-deal through a cross-party motion. The motion, which could be put forward in parliament today, would give members of parliament control over the parliamentary agenda on the 25th June. The pound is adrift following the conflicting signals on Brexit, with many of the Tory frontrunners being clear that no-deal is an option, potentially so they can renegotiate with the EU. Jean Claude Junker, European Commission President stated that ‘there will be no renegotiations as far as the content of the withdrawal agreement is concerned’.
Boris Johnson said today he is “not aiming for a no-deal outcome”. But he did say leaving no deal on the table was a “vital tool of negotiation” and the UK “must do better than the current withdrawal agreement”.
I am of the opinion sterling will remain fragile until we have clarity on Brexit, which at present seems a long way off.
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