Brexit and global trade affect Pound to Canadian Dollar exchange rate
The pound to Canadian dollar exchange rate remains sensitive to all the latest Brexit developments in the UK as well as the ongoing uncertainty over global trade. Boris Johnson has recommitted that Britain will leave the EU by 31st October 2019 although he faces attacks from both the left and the right of the political spectrum which points to a potential rocky ride for GBP/CAD exchange rates. Yesterday, meetings were held by MP’s from opposition parties including Jeremy Corbyn to try and stop a no deal Brexit from ever happening. The group have decided to use legislative means to try and stop Britain leaving without a withdrawal agreement, something that the Prime Minister wants to be able to use as leverage in trying to negotiate a good deal for the UK.
Will Boris Johnson call general election?
Nigel Farage also spoke at a Brexit Party meeting and stated that he does not want the UK to agree to the existing withdrawal agreement. As the markets prepare for the possibility of a general election in the Autumn there could be period of high volatility for GBP vs CAD in the weeks to come. The gridlock in the British parliament remains with the Conservative party holding a majority of just one. That alone must give Boris Johnson the incentive to call a general election to try and command a greater majority. The risk for the pound to Canadian dollar is that the pound often falls in the run up to an election as they are invariably difficult to predict.
Global trade wars influence CAD rates
In Canada the uncertainty over the global trade war has some bearing on the strength of the Canadian dollar due to its place as a commodity currency. Canada exports lots of commodities including oil as Canada in a net producer. Any perceived slowdown in the global economy could be seen as negative for the Canadian dollar.
The Canadian dollar could find itself under renewed pressure after US President Donald Trump imposed higher trade tariffs on China last Friday. The move hit financial markets negatively although on Monday China appeared to seek calm whilst Donal Trump predicted a trade deal still to come. There is the potential for volatility on any trade developments or statements from political leaders in the coming days and weeks.
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