For weeks the US-China trade war has raged on; talks appeared promising previously but recent underwhelming speeches from president Trump have put doubts in investors’ heads. The CAD is heavily influenced on the moves made by its close counterpart the USD. With trade talks thinning out, investors have become wary of the chance of the deal not going through.
US Appears to Show Little Concern for Achieving a Deal
Recent news has suggested that the US is appearing to show little concern for the result of the trade talks. With president Trump giving little mention to the talks in his Tuesday speech at the New York Economy Club, investors began to doubt the chance of a deal at all. This negatively impacted the market as many were hoping Trump would elaborate on how the trade is going and what steps might be taken to move forward. But with him focusing more on putting out his 2020 re-election stall, the trade war didn’t seem a priority.
GBPCAD Exchange Rate Holding Steady Despite Oil Prices Taking a Hit at the ‘Loonie’
The GBPCAD interbank exchange rate held steady this Wednesday at a rate of CA$1.702. This came after the CAD was hit by falling oil prices with mainly the US-China trade talks to thank for it. The waning optimism has caused a crash in Canada’s biggest export.
The pessimism surrounding the trade war deal continued as the chance of reaching ‘Phase One’ was not looking like manifesting anytime soon. The fact that Trump raised the concerns himself over the doubtfulness of a completed ‘Phase One’ further worried investors. This meant that the Canadian dollar failed to gain on the pound.
Worries for the Future of the CAD and Shift in Focus to the GBP
Worries are increasing for the Canadian dollar, which is heavily reliant on trade. Market confidence in the CAD has slumped as rising fears of Canada’s economic strength have been doubted. Falling oil prices have been mainly the reason for the concern.
Investors in the CAD will also be keeping a close eye on the developments in the GBP. The pound struggled to gain on the CAD yesterday after the release of the UK’s October inflation data which disappointed with a drop from 1.7% to 1.5%, its worst performance since 2016. The outlook for GBPCAD will be looking to the UK retail sales figures for October which is due to be released today. A positive result in these figures is likely to give a boost to the British economies confidence as well as improve sentiment in the pound.
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