Being the 7th most traded currency in the world, The Canadian dollar (CAD) is in contention for many traders and buyers alike. Many currencies interact with each other and the pairing between the GBP and CAD is no different. With Brexit talks firmly ongoing, the effect it has had on the CAD/GBP pairing is substantial. Analysts and buyers are keeping a close eye on the events of Brexit and what it may mean for the GBP and currencies that overlap with it.
Brexit’s unpredictable volatility
There are a lot of uncertainties surrounding Brexit. What will happen in the December general election? Which party will prevail? And what will the economic impact be if Brexit is acted upon? These questions raise even more questions and the outcome of Brexit has it’s claws deeply entrenched in many aspects of the economy.
This is particularly true for the relationship between the GBP and other currencies like the CAD. Recent unfoldings in the Brexit drama has seen opposition leader Jeremy Corbyn back the Prime Minister in a general election claiming to bring the most radical campaign for change the country has ever seen. This news meant that the pound to Canadian dollar rate rose as it offered a chance to break the parliamentary deadlock that has been ongoing for months.
Brexit’s effect on the CAD
The unpredictability of Brexit has seen the CAD rise and fall depending on the outcome of particular situations. With the recent announcement of the general election likely being held in early December, the Canadian dollar has gained against GBP. The likelihood of a ‘no deal’ Brexit is reducing, and this is giving a much-needed boost to the GBP.
The current state of the Canadian Dollar
For the CAD, many factors are influencing the currency rate. Oil prices continue to be one of the main reasons as US crude oil inventories cause a fall in oil cost, whilst Trade wars also rage on, forcing banks across the world to cut their interest rates to stay in the race. The Bank of Canada is being closely monitored as it may too look to cut its interest rates like the US. The Bank of Canada held its interest rate at 1.75%. This decision induced a tumble on the CAD towards the end of last week. But in doing so, left the door open for future interest cuts which may help the CAD bounce back.
For more information on how these factors could impact the GBP to CAD interbank exchange rate, please get in touch with one of our Account Managers on +44 (0)1494 360 899 or complete the form below for a call back.