The pound to Canadian dollar exchange rate has fallen sharply since the beginning of May which has presented those looking to sell Canadian dollars to buy pounds with a good opportunity.
Rates for GBP vs CAD now sit at the lowest levels since October 2017. Much of the fall in GBP/CAD rates has stemmed from the resignation of UK Prime Minster Theresa May and the likelihood that Boris Johnson will become the next Prime Minister. Conservative hopefuls Boris Johnson and Jeremy Hunt continue to battle it out in the race for the top job.
Prospect of no deal Brexit hitting GBP/CAD rates
The prospect of a no deal Brexit has become considerably more likely in these last couple of months and the markets are already reflecting this in a weaker pound.
Boris Johnson has made clear that Britain must leave the EU by 31st October 2019, come what may, do or die. The strong words could see a shift in direction in these negotiations and leave open the possibility of a cleaner break for Britain from the EU.
Three months ago the possibility of a no deal Brexit had been almost removed as Parliament voted against this happening. The story has since changed and as such there is likely to be a period of high volatility ahead in these coming months before the 31st October Brexit deadline.
UK interest rates could rise if inflation increases
Bank of England Governor Mark Carney has signalled that interest rates may need to rise in the UK if inflation moves higher, although he is still keen to point out the risks of a no deal Brexit.
Pound to Canadian dollar exchange rates: impact of US interest rates
The Canadian dollar may also find itself impacted by developments from the US Fed’s interest rate agenda. The US Federal Reserve is expected to cut interest rates at the July meeting later this month. Some commentators are even keeping the possibility of a 50 basis point cut as likely and could see considerable market reaction for Canadian dollar exchange rates as well as the other commodity currencies.
Canada has been more inclined to follow the US Fed in terms of raising interest rates and could decide to make a u-turn and decide to cut in the coming months as well. This could have the impact of weakening the Canadian dollar and those with pending currency requirement would be wise to keep a watch on these developments.
If you would like to discuss pound to Canadian dollar exchange rates or have a questions about exchange rates, please feel free to contact me (James Lovick) directly using the form below.