Pound Canadian Dollar Exchange Rate Dives on News Brexit Trade Negotiations Delayed Until March

The Pound has tumbled across the board today, notching up losses of -0.9% against the Canadian Dollar, as markets dwell on the difficulty facing the UK as Brexit negotiations move onto phase two.

Some poor Canadian data has not been enough to prevent the GBP CAD exchange rate slumping nearly two cents to 1.70.

Sterling (GBP) Falls after EU Leaders Warn Difficulty Lies Ahead in Brexit Negotiations Phase Two

The Pound started the day on cautious form as markets awaited the outcome of today’s European Council summit.

European leaders have agreed that ‘sufficient progress’ has been made in the initial talks to move on to the second phase of negotiations.

However, trade talks will not begin for some time, with European Commission President Jean-Claude Juncker telling reporters in Brussels;

‘I think that the real negotiations on the second phase will start in March next year. I cannot say when these negotiations will be concluded, but hope I don’t have to have an as early morning meeting with the Prime Minister than the one I had last week.’

Considering a few weeks ago markets were hoping trade talks could begin in December, news that it could be another three months before those negotiations get underway has understandably sunk the Pound.

Also perturbing markets are the continued warnings over just how hard the next phase of exit talks is likely to be.

European Council President Donald Tusk said today; ‘the second phase will be more demanding, more challenging than the first phase’.

In order to give the EU ample time to ratify the final Brexit deal, the UK needs to have negotiated a trade agreement by October 2018; if talks don’t start until March that leaves just seven months – two months shorter than the time taken to agree the divorce bill, citizens’ rights and the Irish border plans.

Canadian Dollar Rockets Higher despite Surprise Decline in Manufacturing Sales

Weakness in the Pound has allowed the Canadian Dollar to gain sharply today, despite a poor set of manufacturing sales data for October.

As well as September’s growth being revised down to 0.4%, October’s month-on-month sales declined -0.4% instead of increasing 1%.

Providing support for the Canadian Dollar is a small rise in crude oil prices; WTI Crude has climbed 0.5%, while Brent Crude has risen 0.2%.

The recent closure of a major oil pipeline in the North Sea continues to boost oil prices, as it threatens to be out of action for several weeks while a new section of pipe is fitted to replace a cracked piece.

GBP CAD Exchange Rate Forecast; Will CBI Data for Manufacturing Sector Unsettle Pound Sterling?

Data from the Confederation of British Industry (CBI) for December could cause turbulence for the GBP CAD exchange rate on Monday.

Total orders and selling prices trends figures will show whether the weakened state of Sterling continues to boost overseas demand for goods manufactured in the UK, as well as indicating if inflationary pressures continue to rise.

Meanwhile, the only data set for release from Canada will be the international securities transactions figure for October, which is unlikely to have a particularly strong impact.

Laura Parsons

Laura has been working in the financial services sector since 2012 and provides currency news updates for a number of online and print publications. Over the years she has produced exchange rate analysis for publishers like French Property News, The Express, The Telegraph and Forbes.

Contact Laura Parsons