GBP/CAD Exchange Rate Rises on Fading Canadian Dollar Support
UPDATE: The Pound Canadian Dollar exchange rate has risen by 0.3% today, mainly because of reduced optimism among CAD traders.
There are still widespread concerns that the UK could face a no-deal Brexit outcome; these fears have intensified on the news that preparations for no-deal could start in November.
On the Canadian Dollar side, CAD has depreciated as midweek support from the Bank of Canada fades.
The BoC raised interest rates on Wednesday and indicated that more rate hikes were likely, but this outlook hasn’t provided continuous support to CAD rates.
Government’s Preparation for No-Deal Brexit Fails to Prevent GBP/CAD Exchange Rate Gains
The Pound (GBP) has risen by 0.5% against the Canadian Dollar (CAD) today, although the GBP/CAD pairing remains below the week’s best exchange rate of CA$1.7131.
Pound Sterling’s recent rise against CAD is mainly down to the latter currency’s weakness, as the latest UK news has been unsupportive.
Sparking more fears about a no-deal Brexit, it has been revealed that the government will start making preparations for leaving the EU without a deal in November.
A no-deal Brexit is not seen as the desired outcome, but the simple fact that it is regarded as possible has limited GBP/CAD exchange rate gains today.
Canadian Dollar to Pound (CAD/GBP) Exchange Rate Slides on Reduced Support from BoC Meeting
The Canadian Dollar (CAD) has fallen by -0.5% against the Pound (GBP) today, although more broadly the CAD/GBP exchange rate remains near its best level since early October.
CAD received midweek support from the Bank of Canada (BoC) interest rate decision, in which policymakers raised interest rates and suggested more rate hikes on the horizon.
President of Knightsbridge Foreign Exchange, Rahim Madhavji, has suggested that today’s CAD decline is down to the BoC support fading away:
‘I think a little bit of the wind that was pushing [the Canadian Dollar] higher with the BoC raising rates yesterday has dissipated. I think the move … was perhaps too aggressive.’
Pound to Canadian Dollar Exchange Rate Forecast: GBP/CAD Turbulence ahead on Autumn Statement
The Pound (GBP) risks seeing some high volatility in the week ahead, when the Autumn Budget is unveiled on Monday.
This package of spending plans and fiscal adjustments will be keenly watched by GBP traders when it is revealed by Chancellor Philip Hammond.
Many are calling for a spending spree after the Prime Minister declared that the era of austerity was ‘over’, but Mr Hammond must also factor in the Brexit transition period that starts in March next year.
If the budget measures are deemed ‘cautious’ then the Pound could slide against the Canadian Dollar; an unexpected spending boost, however, could push the GBP/CAD rate higher.
Next week’s first major Canadian data will be Wednesday’s GDP growth rate reading for August.
This is tipped to show a slowdown from July’s 0.2% to 0.1%; such a result could disappoint CAD traders and lead to a GBP/CAD exchange rate rise.