Pound to Canadian Dollar Exchange Rate (GBP/CAD) Continues to Climb on Brexit Hopes, Trade Jitters
UPDATE: While the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate was unable to hold onto its best levels on Wednesday, the pair still trended well above the week’s opening levels on Thursday and was edging higher at the time of writing.
Investors continued to gradually buy the Pound (GBP) on hopes that UK-EU Brexit negotiations would go more smoothly.
As uncertainties remained about US-Canada trade negotiations, and Thursday’s Canadian building permits data came in with a surprising contraction, the Pound was able to more easily climb against a weakened Canadian Dollar (CAD).
Pound to Canadian Dollar Exchange Rate Gains Extended as Bank of Canada (BoC) Decision Disappoints with Rates Kept on Hold at 1.5%
UPDATE: As most analysts expected, the Bank of Canada (BoC) opted to leave interest rates frozen at 1.50% in its September policy decision – due largely to uncertainty regarding US-Canada trade relations.
The Canadian Dollar (CAD) weakened following the report, as the future of the North American Free Trade Agreement (NAFTA) and US-Canada trade relations is still filled with uncertainties.
This helped the Pound to Canadian Dollar (GBP/CAD) exchange rate to more easily surge – the interbank level touching a monthly high of C$1.70 at the time of writing.
The primary cause behind Wednesday afternoon’s GBP/CAD surge was a report suggesting the UK and Germany could drop key demands in Brexit negotiations, potentially allowing a deal to be reached more smoothly.
Pound to Canadian Dollar (GBP/CAD) Exchange Rate Slips from Weekly Highs Ahead of BoC Decision
Despite some stronger-than-expected UK services data on Wednesday, the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate still slipped. Canadian Dollar (CAD) investors are currently hotly anticipating this afternoon’s Bank of Canada (BoC) policy decision.
So far this week, GBP/CAD has seen mixed movement. GBP/CAD opened the week at the interbank level of C$1.68 and has fluctuated both lower and higher.
Since Tuesday, GBP/CAD has trended in the region of C$1.69. It fell from its best levels on Wednesday morning, but remains in the region of C$1.69 at the time of writing.
The Pound (GBP) failed to find any notable support in this week’s UK services PMI, despite it beating forecasts. This was due to concerns over Brexit, as well as the Canadian Dollar strengthening ahead of the BoC decision.
Pound (GBP) Exchange Rates Fail to Benefit from Stronger UK Services Stats
Brexit developments and uncertainties have been the focus of Pound (GBP) movement this week, despite some notable UK PMI results from August being published.
The key services PMI beat forecasts on Wednesday, jumping from 53.5 to 54.3 rather than the forecast 53.9. This indicated that Britain’s biggest economic sector was proving more resilient than expected.
However, large uncertainties overshadowed the services sector due to the Brexit process. According to Markit’s report, this is causing staff shortages that are holding back businesses:
‘Backlogs of work increased for the fourth month running in August, which pointed to sustained pressure on operating capacity at service sector companies. A number of firms linked rising volumes of unfinished business to difficulties replacing departing staff.’
Investors were hesitant to buy the Pound despite the report’s higher figures, as concerns about how Brexit will impact the economy going forward, as well as disappointing manufacturing and construction figures earlier in the week, weighed heavily.
Canadian Dollar (CAD) Exchange Rates Edge Higher Ahead of Bank of Canada (BoC) Decision
Despite broad uncertainties about the future of US-Canada trade relations, as well as market disappointment with recent Canadian ecostats, the Canadian Dollar (CAD) saw steadier movement on Wednesday ahead of the Bank of Canada’s (BoC) September policy decision.
The BoC is not expected to make any changes to monetary policy, but some investors still hope it will take a relatively hawkish stance despite recent Canadian news.
The US and Canada failed to reach an agreement on North American Free Trade Agreement (NAFTA) renegotiations last week, causing the relatively risky trade-correlated Canadian Dollar to weaken.
On top of that, Tuesday’s Canadian manufacturing PMI fell short of forecasts, slipping to 56.8 rather than the forecast 57.1. It followed last week’s disappointing Canadian growth rate data.
Pound to Canadian Dollar (GBP/CAD) Forecast: Brexit Developments and Canadian Job Stats in Focus
While the Bank of Canada’s (BoC) September policy decision is likely to influence the Canadian Dollar (CAD), Canadian Dollar investors will also remain focused on US-Canada trade developments.
Despite failing to reach a deal last week, US-Canada trade talks are set to continue this week.
If the nations still fail to reach any kind of trade agreement, the Pound to Canadian Dollar (GBP/CAD) exchange rate could be in for further losses.
Analysts predict that some form of deal is likely eventually, but there is a lot of short-term uncertainty weighing on the Canadian Dollar for now.
Pound (GBP) movement will continue to be influenced by potential developments in Brexit negotiations and the future of Bank of England (BoE) Governor Mark Carney, amid a lack of notable UK data due for publication until next week.
There is still some notable Canadian data due for publication towards the end of the week. Canada’s August jobs market report, due on Friday afternoon, could cause some late-week movement in the Pound to Canadian Dollar (GBP/CAD) exchange rate.