GPB/CAD Exchange Rate Surges as Oil Crisis Bites and Canadian Imports and Exports Drop

GPB/CAD Exchange Rate Surges as Canadian Imports and Exports Drop

UPDATE: The Pound Canadian Dollar (GBP/CAD) exchange rate further increased this afternoon on the release of Canada’s imports and exports data for October decreased.

This came out at the same time as the international merchandise trade figures for October showed a significant drop at CA$-1.17bn, a CA$0.28bn drop against September.

The Ivey PMIs for November also followed which further decreased, causing concern for ‘Loonie’ investors.

A speech by BoC’s Governor, Stephen Poloz, today focused on Canada’s oil crisis, with demand being hit by increasingly volatile US-China trade tensions.

GBP/CAD Exchange Rate Rises as BoC’s Interest Rate Hold Weakens ‘Loonie’

The Pound Sterling Canadian Dollar (GBP/CAD) exchange rate is up today, and is currently trading at CAD$1.7120, after the Bank of Canada (BoC) decided to hold interest rates at 1.75% yesterday.

This comes after a cycle of hikes since 2017 – potentially boding a slowing down of the Canadian economy.

The Pound (GBP) meanwhile was bolstered by the recent bout of Brexit developments, with the primary focus being on the European Court of Justice’s (ECJ) announcement that the UK can unilaterally revoke Article 50, further easing Brexit ‘no-deal’ fears.

GBP was dented by yesterday’s release of the UK services PMI for November, which showed a worse-than-expected decrease at 50.4 – down by -1.8 on October’s figure.

This also came after yesterday’s poor UK car sales for November, showing a decrease on the previous month.

Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Climbs as Brexit Developments Ease ‘No-Deal’ Fears

The Pound (GBP) benefited from UK Prime Minister Theresa May’s show of resilience today, with requests from Parliament to postpone the vote on 11 December rejected.

May commented this morning:

‘No. What I am doing is leading up to a vote on Tuesday. Yes I am meeting colleagues, I’m listening to colleagues’ concerns. Not about delaying it. . .’

Tomorrow, however, may see the Pound (GBP) dented by the release of the Halifax house prices figures for November, which are expected to decrease against October’s figures.

GBP has found support from the recent slew of Brexit news, with MP Dominic Grieve’s amendment being passed, further enabling Parliament to decide on what happens should May’s Brexit deal be rejected.

This has eased some of the tensions over fears of a chaotic Brexit as increasing options provide several possible outcomes that have soothed last week’s forecasted fears.

CAD/GBP Exchange Rate Suffers after US-China Trade Tensions Show Signs of Flaring Up

The Canadian Dollar (CAD) suffered from yesterday’s announcement that interest rates would be held at 1.75%, with BoC stating:

‘Oil prices have fallen sharply since the October Monetary Policy Report, reflecting a combination of geopolitical developments, uncertainty about global growth prospects, and expansion of U.S. shale oil production.’

This came after the news that the Canadian province of Alberta plans to cut its oil output, as well as news that Oshawa’s General Motors plant is to close down, impacting 15,000 jobs.

The increasing trade tensions between the US and China, which showed signs of reigniting, have also weighed heavily on the risk-sensitive ‘Loonie’.

Today, however, will see the release of the international merchandise trade figures for October, which are expected to decrease, making CAD investors skittish.

These will be followed by the release of export and import figures for October, which are both expected to increase.

The Ivey PMIs are due to follow, which shows an expected decrease on last month’s bullish 61.8.

GBP/CAD Outlook: Brexit Remains in Focus while Canada Awaits Friday’s Employment Figures

The Pound Sterling Canadian Dollar (GBP/CAD) exchange rate will be driven by political forces this week, as Theresa May rallies to gain support for her Brexit withdrawal agreement ahead of the crucial vote on 11 December.

Monday will also see the announcement of the ECJ’s ruling on Article 50 – which has put increasing pressure on Theresa May – and providing traction for Remainers’ increasing calls for a second referendum.

Friday will also see the release of the consumer inflation expectations data, with investors taking particular note of any signs of a decrease.

Friday will also see the release of Canada’s employment figures for November, which are expected to decrease, potentially hitting the ‘Loonie’.

John Cameron

John studied economics at Cambridge University and later became an MSTA qualified Technical Analyst. He began working for TorFX almost a decade ago and now holds a Senior Account Manager position. As well as lending his clients support and guidance, John has produced market commentary and detailed exchange rate analysis for a number of online publications.

Contact John Cameron