The Pound eased slightly lower against the Canadian Dollar as a new week of trading got underway.
Sterling has softened against most of the majors on concerns about Article 50 and speculation that Scotland could call for a second independence referendum in the near future.
Last week the interbank GBP CAD exchange rate was able to advance slightly from 1.62 to 1.63.
Sterling Slumps after Report Points to EU Citizen ‘Cut-Off Point’
The Pound’s losses today come as peers in the House of Lords debate the Article 50 bill. The bill needs to be approved before the Prime Minister can start the process for taking the UK out of the EU, but before then the bill can be amended.
Last week saw a late surge in demand for the Pound on hopes the Lords would push through some amendments, including securing the rights of EU citizens already living in the UK.
Since then, a report has alleged that the PM could introduce a cut-off date in mid-March, after which EU citizens moving to the UK could not be assured of permanent residence.
If true, this plan may negatively impact future negotiations with EU officials and raise the odds of the UK getting a worse deal at the end of talks.
Reports that Scotland could be on the verge of calling another independence referendum also exerted pressure on the Pound on Monday and sent the currency lower against the Euro and US Dollar.
Canadian Dollar Gains as Crude Oil Prices Rise
The Canadian Dollar has advanced in tandem with the cost of crude oil going up.
Crude prices have been highly volatile lately, but the modest advance from $54 per barrel to $54.34 has nonetheless been a positive influence on the Canadian Dollar.
The Canadian Dollar was also supported by last week’s news that domestic inflation climbed on both the month and the year.
GBP/CAD Exchange Rate Forecast
This week, Pound/Canadian Dollar exchange rate movement may occur as a result of the UK’s confidence and PMI reports.
The confidence figure is expected to decline, with the PMIs predicted to show a drop in manufacturing and services output along with a slight rise in construction. If the ecostats print as expected we may see the Pound weaken against its main peers.
GBP investors will also be looking to the House of Lords; if peers manage to approve any amendments that could stave off ‘Hard Brexit’ the Pound could rally against the Canadian Dollar.
The week’s big Canadian announcements will be Wednesday’s Bank of Canada (BOC) interest rate decision, Thursday’s GDP stats and a pair of BOC speeches on Thursday and Friday.
Canada’s interest rate is not expected to be changed from the present 0.5%, but predictions for a slowdown in GDP growth could trigger a late-week slide for the Canadian Dollar if they prove accurate.
That being said, if the BOC speeches contain hawkish comments and point to a near-term interest rate hike, then any Canadian Dollar negativity from poor GDP stats could be cancelled out.