Pound to Canadian Dollar rates continue to slide
The pound to Canadian dollar exchange rate continues to test the lower levels in this recent range with rates for GBP vs CAD slipping below 1.63 for the pair. Tomorrow will see the announcement of the next British Prime Minister who will take office on Wednesday and the markets have largely priced in the likelihood that Boris Johnson will take the top job. A speech is expected to be made on Wednesday at 5pm and there is likely to be considerable volatility in the days and weeks ahead as Brexit becomes the main driver for sterling exchange rates.
Boris’ no deal hard-line weighs on Sterling: Bank of England predicts steep fall in the Pounds value in no deal scenario
The strength of GBP/CAD is largely been driven by the prospect of a no deal Brexit and whether or not Boris Johnson will be able to persuade parliament to leave it on the table. A no deal Brexit is largely perceived as negative for the pound with major weakness expected. The Bank of England has predicted steep falls in the price of sterling should a no deal materialise. Those looking to buy or sell Canadian dollars would be wise to consider planning around this major change in British politics with a new PM expected imminently.
Canadian Dollar Strength: What lies ahead for the CAD?
The Canadian dollar meanwhile goes from strength to strength having one of the best years compared to other major currencies. There are however concerns that the future may not be so bright for the Canadian dollar. The view is that with the ongoing trade war between the US and China and an evident cooling in the global economy this could bode negatively for the Canadian dollar. With protectionism on the rise there is a growing chance the economic data in Canada may start to slide off.
The price of oil has also been falling and as a commodity currency the Canadian dollar is susceptible to changes in oil prices. As a net exporter of oil, the Canadian dollar normally performs best when the price of oil is at its highest. Any escalation in the middle East however could see the price of oil drive higher and this could result in Canadian dollar strength. With the recent scuffles with British and Iranian ships there could be additional volatility depending on whether the issues are resolved diplomatically.
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