Pound to Canadian Dollar Exchange Rate Investors Buy CAD despite Weaker Oil Prices
Despite tumbling prices of oil, Canada’s most lucrative commodity, the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate was sliding on Friday ahead of the publication of key Canadian ecostats.
While GBP/CAD trended almost a cent above the week’s opening levels of 1.68, the pair has still fallen from Thursday’s weekly high.
Investors bought the Canadian Dollar (CAD) on Friday morning ahead of the publication of key Canadian inflation and retail sales results, despite news that oil prices were trending near their worst levels all year.
The Canadian Dollar was able to more easily push the Pound to Canadian Dollar exchange rate lower, as uncertainties about domestic support for the UK-EU Brexit deal dampen market appetite for the Pound (GBP).
Pound (GBP) Exchange Rate Strength Dampened by UK-EU Brexit Deal Criticism
The Pound to Canadian Dollar (GBP/CAD) exchange rate ultimately advanced this week thanks to a political declaration from the UK and EU, outlining the aims of post-Brexit relations.
The news made investors confident that UK-EU Brexit negotiations had essentially come to an end, with the deal now widely expected to be finalised at an upcoming EU summit on Sunday.
However, the Pound’s strength was limited on Friday as market focus gradually returned to UK politics and the uncertainty the bill will face against UK Parliament.
Parliament will hold a vote on the UK-EU Brexit deal in December, but a rising number of critics suggest that the bill lacks the support to successfully pass.
Former UK Brexit Secretary Dominic Raab, who resigned from Prime Minister Theresa May’s Cabinet last week in protest of the deal, said he believed the deal would be blocked by Parliament.
Canadian Dollar (CAD) Exchange Rates Firm Ahead of Key Data Despite Oil Price Weakness
A combination of factors prevented the risky trade-correlated Canadian Dollar (CAD) from being dragged lower with risk-sentiment on Friday morning, making it easier for the currency to regain some ground against the Pound (GBP).
As the US Dollar (USD) recovered from lows following days of losses, the Canadian Dollar also advanced due to the close relation the currencies share.
On top of this, investors bought the Canadian Dollar in anticipation of the afternoon’s expected Canadian Consumer Price Index (CPI) inflation rate stats from October, and September retail sales results.
If Canadian data beats expectations the Canadian Dollar could regain more of its losses versus the Pound.
The Canadian Dollar’s Friday sturdiness came despite news that prices of oil, Canada’s most lucrative commodity, had hit their worst levels since November 2017.
The latest plunge in oil prices was once again due to fears of oil oversupply and global trade tensions.
Pound to Canadian Dollar (GBP/CAD) Exchange Rate Investors Anticipate Brexit and Trade News
There won’t be much major UK or Canadian data published until the end of next week, leaving the Pound to Canadian Dollar (GBP/CAD) exchange rate to react more to developments in politics and trade.
The UK and EU are expected to finalise the Brexit deal during Sunday’s upcoming EU summit, and unless the outcome is surprising the Pound (GBP) may not see much reaction to this either.
Sterling’s strength may be especially subdued if there are any developments in UK politics worsening the perceived chances of the Brexit bill successfully passing UK Parliament.
While the Parliament vote will not be held until December, shifts in UK MP support for the bill is likely to be a driving force in Pound movement in the coming weeks.
As for the Canadian Dollar, developments in the oil price outlook and in global trade jitters could influence the ‘Loonie’.
US President Donald Trump and China President Xi Jinping are expected to meet during a G20 meeting in Argentina next week. Any developments regarding US-China trade relations could prove highly influential.
Of course, next Friday’s UK consumer confidence and Canadian Gross Domestic Product (GDP) growth rate results could also influence the Pound to Canadian Dollar (GBP/CAD) exchange rate.