The Canadian dollar has been noted as the top performing currency in 2019, beating the likes of the GBP, USD and EUR. However, investors are concerned that the currency may be starting to peak and is due for a sharp decline in 2020 as it may struggle to find an encore. Economists are suggesting that the tailwinds seen in 2019 may start to fade as 2020 gets underway. Meanwhile, the GBP suffered losses after the release of poor economic data in the form of the December manufacturing PMIs.
Economists Suggest CAD Is Heading for a Twist of Fate in 2020
Despite the over-performing year of the Canadian dollar in 2019, analysts at Scotiabank are not convinced that the currency can keep up its run going into the new year. It is a given that risk-sensitive currencies like the ‘Loonie’ are expected to perform should global economy continue to firm. But economists are convinced that the Bank of Canada’s (BoC) policy makers are likely to attempt to avoid a significant rise. They stated that the biggest risk to the CAD is the BoC themselves as they often tend to react dovishly when the Canadian dollar shows signs of strength. The central bank is also on the search for a new chief which could bring about problems for the currency as uncertainty creeps in about the new candidate.
GBP Suffers Losses at the Hand of Weak Manufacturing Data for December
Yesterday saw the release of the UK’s December manufacturing PMIs. The data was poor and disappointed the GBP investors, lowering confidence that the sectors has what it takes to recover in 2020. The index returned at 47.5 which is well into the contraction level. As the news hit the UK economy muted as fears of sustained weakness grew within the market. This news was positive for CAD investors as the GBP/CAD exchange rate tilted more in the favour of the Canadian dollar. The GBP could also be at risk of further losses as the UK’s borrowing figures are forecast to be lower. The figures are set to be released later today and could see the GBP slump further, which may be music to the ears of Canadian dollar investors in the exchange rate crossover.
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