Arriving into the middle of the week, both CAD and GBP have suffered setbacks. For CAD, the arrival of a shock drop in factory sales saw the currency lose strength on Tuesday. Whilst announcements from the UK Government that a hard Brexit deadline of December 2020 has been set sent the GBP hurtling as uncertainty shadowed the plans for the UK’s future.
Risky Move from UK Prime Minister Causes GBP to Fall
On Tuesday, the UK PM Boris Johnson announced that the UK has set a hard deadline on Brexit for December 2020. This means that there will be no further extensions beyond this date and thus has put the potential for a ‘no deal’ Brexit back on the table. Markets responded to this with shock as the GBP was sent spiralling down. Proposing a hard deadline meant that the pressure was piled on Brussels to accept a deal, if no deal is struck then the UK once more risks the chance of leaving the EU without an agreement in place.
Decline in Factory Sales Sends Cad Falling with US-China Talks Piling on the Pressure
The Canadian Dollar was riding the wave of a seven-week high on Monday, but Tuesday brought this crashing down as a coupling of Brexit worries and poor domestic data surfaced a shock decline in manufacturing shipments. Canada is a major exporter of many commodities, with the main one being oil. The potential slowdown in the global flow of trade or capital could be set to hurt the countries economy should it continue. Reports from the domestic data in Canada showed that factory sales decreased by 0.7% in October from September as the strikes from the United Auto Workers in the US weighed on the sales of transportation equipment according to Statistics Canada. Meanwhile, the price of oil remains positive for Canada as hopes that the US-China trade deal will bolster the demand for oil in the upcoming year ran high. Added to this, the chance of lower US crude supplies further supported the price of oil.
Looking ahead for CAD, its inflation reports for November is due to be released later today. With the release of the report, it will likely help guide the expectations for the Bank of Canada’s (BoC) interest rate outlook.
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