Strong GBP Prepares for Defining Week with General Election Whilst Canadian Dollar Digests Poor Jobs Data

Canadian Dollar Suffers Seven-Week Low Following the Spread of the Coronavirus

The GBP ended trading last week in a strong position. Markets were confident that Boris Johnson and his Conservative party is very likely to pull off a majority win in the elections. But the Pound could soften in the days running up to the election as doubt creeps in. Meanwhile, the Canadian Dollar is still attempting to digest recent poor economic data, namely the November jobs report.

Pound Could Soften Early This Week as Doubt Sets in Ahead of the Election

For the GBP, this week will be a defining moment in Britain’s history. Should the Conservatives pull through a majority win then Brexit will be seen through. One of the major points of their manifesto was that Brexit will be a done deal and sealed at the start of January. The markets are hoping this will be the case and if so, the GBP will likely rise. But there is a chance that speculation could set in and as some investors take profits off the table after a strong performance from the GBP since early October the GBP could lose some headway. However, economists are expecting a slight dip in the performance of the GBP as one of the biggest economic decisions is about to be made on Thursday, so it is very high risk, it is reasonable that some may not be willing to take part in the risk.

Poor Canadian economic data sinks its strength

The CAD sunk last week amidst the release of the Canadian jobs report, which has been described as about as bad as it gets. The figures showed a rise in unemployment, around 10,000 jobs were shed with a rise up from 5.5% to 5.9% in one showing. This came as a surprise to the Canadian economy as the data came off the back of the BoC announcing that it could see evidence of the global economy stabilising. Canada’s attention will turn to BoC governor Poloz’s speech which is due on Wednesday regarding the Canadian economic outlook. A CAD rally was hoped for this week before the jobs data was unveiled, but instead it now seems it will likely hold its recent range. The outlook of the CAD will likely follow the path announced by Poloz, which will make his speech one to look out for.

Optimism also surrounds the US-China talks which have raged on for a few months. President Trump noted that a very substantial Phase One deal has been agreed upon but has also retracted this in saying that a deal like this “could be reached”. Should the two countries come to a mutual agreement the CAD will likely benefit, this is what investors will be hoping for following the CAD’s recent under performance and exposure to weak economic data.

If you would like to learn more about what may affect the GBP/CAD or have an upcoming currency transfer, feel free to contact me, Tom Holian, using the form below.