Investors in the Canadian Dollar are hoping that the currency can benefit from the US-China trade deal signing. CAD capped off 2019 with a fair performance and investors are looking toward the deal to keep the currency on the right path. With the Bank of Canada not looking likely to cut rates any time soon, CAD could be in a good place. However, the oil-sensitive Canadian Dollar’s gains have been limited as oil prices fall following easing tensions in the Middle East. Meanwhile, the GBP lost out as poor GDP data for November was released yesterday. The figures showed a contraction in the economy which did little to support GBP. The BoE is also under pressure as rate cut bets are ever-increasing.
Canadian Dollar Looks to Phase One Deal Completion for Gains
The global trade-reliant Canadian Dollar is turning its attention to the completion of the US-China phase one deal which could see investors strike gold if CAD benefits. Shaun Osbourne, Chief Strategist at Scotiabank noted that the BoC’s governor, Stephen Poloz does not look like a central bank whom wishes to cut the interest rates right now. He also mentioned that the CAD gained support after the December rebound in jobs shocked the market and lessened the near-term rate cut further. However, CAD may lose out as oil prices begin to drop after a de-escalation in the Middle East as tensions ease between the US and Iran after an eventful few weeks which included US air-strikes on Iran. The easing saw WTI crude oil prices fall to around $59 a barrel.
GBP Tumbles After Poor GDP Data and Concerns Over Bank of England Rate Cut Possibilities
GBP has given CAD the upper hand in their exchange rate pairing after a run of bad news for the currency. Yesterday saw the release of November’s GDP data which revealed a 0.3% contraction for the UK economy. This news saw GBP tumble across the board and back below 1.70 versus CAD on the interbank levels for the second time this year so far. Added to this, bets have begun to increase for a BoE interest rate cut in the coming months, this came after recent dovish comments from figures at the BoE. Furthermore, a Monetary Policy Committee member for the BoE recently stated that he would vote in favour of a cut should this month’s economic data releases continue their recent poor run. These events have led to GBP losing favour with the market and has enabled CAD to edge over GBP as the UK awaits Wednesday’s UK consumer price index for December.
If you would like updates for GBP/CAD rates or have an upcoming currency transfer, please contact me directly using the form below.