GBP/CAD Exchange Rate Buoyed in Advance of BoE Brexit Deal Analysis
UPDATE: The Pound Sterling Canadian Dollar (GBP/CAD) exchange rate is pushing higher this afternoon as markets await the publication of the Bank of England’s (BoE) analysis of Theresa May’s Brexit deal.
This comes despite the publication of Government figures which forecast the UK economy will be still be 3.9% smaller over the next 15 years under the plan that it would have been in a ‘no change’ scenario.
At the same time the Canadian Dollar is on the defensive today as CAD sentiment is undermined by ongoing trade concerns as well as another slump in oil prices.
GBP/CAD Exchange Rate Fluctuates as Brexit Remains in Focus
The Pound Sterling Canadian Dollar (GBP/CAD) exchange rate fluctuated last week as the latest developments in Brexit rocked the pairing.
This resulted in a particularly sharp upswing in GBP/CAD on Thursday as the EU announced a political declaration on the future of UK-EU relations had been ‘agreed in principle’, allowing EU leaders to approve the UK’s withdrawal deal at a special summit over the weekend.
Meanwhile the Canadian Dollar was undermined last week by some major volatility in oil prices which saw US crude strike a 2018 low as it touched $50 a barrel.
However the ‘Loonie’ was able to limit its losses at the very end of the week as domestic inflation and retail sales growth both beat expectations.
Pound Sterling (GBP) Exchange Rates Pummelled by Trump’s Brexit Deal Criticism
The Pound (GBP) weakened against the Canadian (CAD) and the majority of its other peers this morning as markets reacted to US President Donald Trump’s latest comments on Brexit.
Speaking to reporters outside the White House late on Monday Trump said that he thought the current agreement ‘sounds like a great deal for the EU’, but warned it could hinder future UK-US relations.
Trump quickly zeroed in on the possibility that Theresa May’s withdrawal agreement could be damaging to a future UK-US trade deal, telling reporters:
‘Right now if you look at the deal, [the UK] may not be able to trade with us. And that wouldn’t be a good thing. I don’t think they meant that.’
President Trump called the Brexit agreement "a great deal for the E.U.," and warned that, if it were adopted, it might obstruct a free trade deal between the United States and Britain https://t.co/SvDbYwzgEB
— The New York Times (@nytimes) November 27, 2018
Downing Street was quick to respond to the comments as officials insisted that the agreement would allow the UK to seek new trade deals outside of the EU and that talks between the UK and US had already laid the groundwork for an ‘ambitious agreement’.
However this was not enough to rebuild confidence in GBP investors, many of whom appeared skittish that Trump’s remarks may provide even more ammunition for MPs who oppose the deal and make it more difficult for May to push the deal through parliament next month.
GBP/CAD Exchange Rate Forecast: BoE Brexit Deal Assessment in Focus
Looking ahead to the remainder of this week, movement in the Pound Sterling Canadian Dollar (GBP/CAD) exchange rate is likely to be driven by the Bank of England’s (BoE) latest Financial Stability Review on Wednesday.
The review is expected to include not just the BoE’s latest economic forecasts but also the bank’s formal assessment of the Brexit deal in comparison to a no-deal Brexit.
Meanwhile the focus for CAD investors this week will be the publication of Canada’s latest GDP figures on Friday, with the Canadian Dollar expected to slide if domestic growth slowed in the third quarter as forecast.
In the meantime, the ongoing volatility in crude prices could also cause some concern for CAD investors, with markets likely to remain wary of the oil-sensitive ‘Loonie’.