The pound is not the destination of choice when it comes to times of global economic uncertainty. It is not considered a safe haven currency and there is a huge imbalance between imports and exports which causes fragility for the pound.
Coronavirus and Brexit Cause Sterling Weakness
Even without the coronavirus situation sterling is not in good standing, there is still Brexit to contend with. Investors are concerned at the probability of a no deal scenario and Boris has done little to ease those concerns. Despite the coronavirus there has been no mention of an extension in trade talks. It may be the case that the PM thinks that after the coronavirus blows over he will then proceed to get a trade deal put through by the end of 2020.
If we look at Brexit negotiations thus far there has hardly been a point where we can say that was solved quickly and amicably. The likeliness of talks being problematic are high, as are the expectations of Johnson if he feels a deal can be struck by the end of 2020. Of course, it may be the case that Boris is using the prospect of a no deal as ammunition against the EU in talks, but this will not sit well with investors and does not bode well for the pound.
Oil Price Collapse Harming CAD Value
The Canadian dollar is also not in the strongest position, CAD is considered a riskier commodity-based currency. Canada’s primary export is oil and at present the oil price war is doing the Canadian economy no favours. Oil is currently flooding the market and the excess volume is driving down price. If there is resolution between the warring sides and oil production lessens this could cause Canadian dollar strength.
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