The Canadian Dollar received a needed boost yesterday as President Trump had positive comments to make about the deal suggesting that it is in its final phases. This gave a boost to CAD – which is closely linked to the US economies success. The boost saw GBP/CAD exchange rate mute as a previously underperforming CAD caught up to a steady GBP.
Positivity Coming out of Both the US and China Camps Regarding the ‘Phase One’ Deal
US President Donald Trump spoke to reporters following his high-level phone call, he mentioned that Washington and Beijing were in the final stages of completing the talks. He also emphasised that the deal was “one of the most important deals in trade ever”. Whilst the deal was going well he also suggested that the US would like to see it go well in Hong Kong. For CAD, the upswing was welcomed but the gains were limited. The limitations were caused by the Presidents interest in the Hong Kong protests, which China advised Washington to avoid.
Conservative Lead Narrows Which Weighs upon the GBP
To ensure GBP continues to perform, the outcome of the election must swing in favour of a Conservative majority. Recent polls showed that the Tories held a majority but as the deadline draws closer the Labour party has begun to creep closer and narrow the gap. This has led to pessimism as to whether the Tories can pull off the majority on 12th December. This news is positive for the CAD/GBP exchange rate as this allows CAD to make up some lost ground against the Pound.
The emphasis surrounding the Conservative majority is due to a lesser chance of a hard Brexit and would likely avoid political lock-ups which have previously hindered the Sterling’s performance in the markets due to uncertainties. A Labour majority would provide a softer Brexit, but radical socialist policies have many doubting it would benefit the Pound.
US-China Trade Optimism Buoys the Price of Oil
Oil prices have been bolstered following the positive news surrounding the US-China trade deal. Experts have described the main support for oil prices as ensuring an ease in the trade war. In doing so, the fear of slowing conditions and the impact on oil and fuel demand growth will be taken out of the market. Positive talks between Washington and Beijing have investors hoping that the ‘Phase One’ deal can reach a conclusion.
For CAD, Q3 GDP data is set to be released on Friday, should the results be negative it could cause GBP/CAD exchange rate to rise. Eyes will turn to the unfolding of the trade war as well as the results of Fridays data for an insight into the short-term success of CAD.
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