The GBP/CAD exchange rate has slipped in the early New Year trading as the Canadian dollar rose above all major competitors bar the Japanese Yen. The outlook for the upcoming week suggests that the rate will bare neutral but the charts are suggesting this may not be the case and argue for further losses.
Resilient Loonie Pushes Forward Despite US Air-Strikes on Iran
Last week the Canadian dollar broke through and kept the GBP under pressure as the CAD surpassed the 1.30 resistance level against the USD. Investors celebrated the claim from the US President that the ‘phase one’ trade deal between the US and China was to be signed on the 15th January. The CAD remained strong even through the admittance of the US surrounding the air-strikes which targeted and killed Iranian General Qassem Soleimani. A strategist for Nordea Markets, Andreas Steno Larsen, suggested that the biggest take away from the event for the market is that oil will now have to trade with a risk premium.
Falling GBP Looks Towards Brexit Withdrawal Agreement Bill and December PMIs for Support
For the GBP, it will be looking to get itself back on its feet this week as a couple of important events are set to unfold. Later today will see the release of the IHS Markit final services PMI for December. The predictions suggest that the flash estimate of 49.0 will be revised to 49.1. The GBP softened against the euro and the dollar going into the weekend as investors dealt with the admission from the US President of the Iran air-strikes. The GBP will be hoping that further clarity on Brexit can rally support as Tuesday will see the Brexit Withdrawal Agreement Bill be put back infront of parliament for the ‘committee stage’ before the whole of House. It is likely to take until the end of Thursday for the bill to be reviewed and passed. There is a chance that the bill may not be passed, but given the scale of the Conservative majority, it looks unlikely that this would be the case.
The Canadian dollar looks to hold onto gains through the rise in cost of oil due to recent events. But the currency will be hoping to rally further support as Thursday will see the Bank of Canada’s governor Stephen Poloz address the Greater Vancouver Board of Trade’s Economic Outlook Forum. In this speech he is expected to give an insight into the banks reading of the November jobs report. Whilst Friday will see the release of Decembers jobs figures from Statistics Canada. The market will be hoping for a fall in unemployment and a rise in new jobs created for the month.
If you’re considering buying or selling Canadian dollars and would like to compare rates or know more about the factors that could impact your exchange rate, feel free to contact me directly, I look forward to hearing from you.