The GBP/CAD exchange rate held its rate yesterday, with the pairing finishing up trading at around CA$1.740 after the release of Canada’s Industrial Capacity figure for the Q3 fell below expectations at around 81.7%. The result was lower than was expected but did not surprise many as the economy had slowed in the Q3 according to analysts. Meanwhile, the US Federal Reserve is set to announce its decision on rate cuts and the UK is on the edge of its seat awaiting the results from the General Election which will take place today.
CAD Outlook Set to Be Determined on Fed Reserve Decision
For the CAD, it remains on a cautious approach heading into the latter end of the week. The US Federal Reserve is expected to hold its rate at 1.75% but any dovish comments from the Fed could weaken the Canadian Dollar’s confidence which is closely linked to the strength of the American economy. The US-China trade talks are also a highlight for the CAD as Canada is set to benefit from a deal being struck between the world’s two largest economies. Economists expect a last minute deal to be brought forward which may have experienced tweaks and fine tuning but should give a boost to the markets which will rally upon the news.
GBP/CAD Outlook Largely Dependent on General Election Outcome
For the GBP, its strength will depend largely on today’s (Thursday) General Election. The markets are favouring a Conservative majority which will likely ensure that Brexit is followed through with a deal at the start of 2020. However, recent YouGov polls have suggested that a hung parliament is at risk, if this is true this could cause a huge spanner in the works for the GBP. Experts are suggesting that ‘tactical voting’ may play a part in the undoing of the Conservative majority.
Attention will solely be shining on the election today and with the results set to be announced in the early hours of Friday morning, the course that the GBP sets out upon will be dictated by the outcome of the election. A tory majority in government would likely see Brexit carried out with a deal, whilst a hung parliament could spell disaster for the GBP as a “No Deal” Brexit may occur or a further time extension from Brussels may need to be requested.
For the CAD, Governor Poloz of the BoC is set to give a speech later today which will likely shape the CAD’s future direction. Any dovish commentary from Poloz will likely hit at the CAD causing it to slide.
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