Pound to Canadian Dollar Exchange Rate Pushed Back as Canadian Dollar Benefits from Risk-Sentiment
UPDATE: Investors looking for riskier, trade-correlated currencies to buy today have been buying the Canadian Dollar (CAD) today. As a result, the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate has fallen to nearer the week’s opening levels.
The Canadian Dollar was more appealing than its peers due to news that oil prices had been boosted by progress in US-China trade talks.
Oil, Canada’s most lucrative commodity, has seen price weakness in recent weeks. The oil price jump gave the Canadian Dollar a boost, while the Pound (GBP) was limp on Brexit uncertainties ahead of this evening’s UK Parliament vote.
Pound to Canadian Dollar Exchange Rate Slips Following Monday Jump amid Brexit Uncertainty
After climbing at the beginning of the week, the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate steadied slightly this morning. Investors are avoiding major trades as markets await this evening’s UK Parliament Brexit vote.
GBP/CAD avoided losses last week thanks to a strong Friday recovery, and hopes that the Brexit process could be delayed kept the pair climbing on Monday.
GBP/CAD ultimately hasn’t moved too far from the inter-bank rate of CA$1.70 however, at least ahead of tonight’s Brexit vote.
Pound (GBP) investors are especially cautious today, with most major Pound pairings having not moved too much.
Most of today’s Pound to Canadian Dollar exchange rate movement so far has been caused by stronger demand for the Canadian Dollar (CAD), as the risky trade-correlated currency benefits from optimistic economic news from China.
Pound (GBP) Exchange Rates Steady as Investors Anticipate Major Brexit Development
Demand for the Pound (GBP) was fairly solid at the beginning of the week, as investors adjusted positions on the British currency ahead of what is expected to be a major event for the UK outlook today.
Sterling was briefly more appealing on news that the EU was prepared to officially delay the formal Brexit date if the UK were to ask.
This bolstered market hopes that the UK would have time to resolve uncertainty regarding how the Brexit process will unfold.
Monday also saw UK Prime Minister Theresa May refuse to rule out an extension to Article 50, making investors more confident that a delay was becoming more likely.
Canadian Dollar (CAD) Exchange Rates Firm on Higher Market Risk-Sentiment
After slipping on Monday, the Canadian Dollar (CAD) firmed a little on Tuesday and pushed GBP/CAD down from its weekly highs.
The Canadian Dollar looked unappealing at the beginning of the week amid news that China’s latest import and export stats had come in well below expectations. This worsened concerns about slowing growth in the world’s second biggest economy.
This, as well as a weaker oil price, made investors hesitant to take risks and led to CAD weakness yesterday.
Risk-sentiment improved just slightly today, as Beijing announced fresh tax cuts and spending plans in efforts to boost China’s economy. The news made investors more eager to buy risky trade-correlated currencies and the Canadian Dollar strengthened.
However, as oil prices remained weak the Canadian Dollar’s gains versus the Pound (GBP) were limited, and market movement was limited with the upcoming Brexit vote in focus.
Pound to Canadian Dollar (GBP/CAD) Exchange Rate to be driven by Brexit Outlook
While risk-sentiment has proven influential this week so far, the Pound to Canadian Dollar (GBP/CAD) exchange rate could see sharp movements in the coming days depending on how this evening’s Brexit vote turns out.
UK Prime Minister Theresa May’s long-negotiated UK-EU Brexit withdrawal deal is not expected to have the support needed to pass through Parliament in today’s vote, meaning MPs will likely begin searching for alternative resolutions.
There are still many potential outcomes to the Brexit process, but currency investors dislike uncertainty and the fresh lack of clarity about how Brexit will unfold is likely to leave the Pound (GBP) even weaker.
If MPs or the government lean towards alternative outcomes, like a general election or no-deal Brexit, there may be even further weakness ahead for the Pound in the coming weeks.
Canadian Dollar investors are more likely to react to Chinese growth news, oil prices and overall market shifts in risk-sentiment in the coming sessions amid a lack of notable Canadian data due for publication until Friday.
Essentially, expect volatility in the Pound to Canadian Dollar (GBP/CAD) exchange rate as the Brexit process develops and news from China influences risk-sentiment.