GBP/CAD Exchange Rate Stalls as UK Stuck in Brexit Limbo
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is rangebound this morning as Theresa May summoned her cabinet for a five-hour meeting.
At the time of writing the GBP/CAD exchange rate is virtually unchanged, leaving the pairing trading close to a one-month low.
Pound Sterling (GBP) Exchange Rate Muted as May Faces Her Cabinet amidst Brexit Chaos
The Pound (GBP) is stuck in a neutral range against the Canadian Dollar (CAD) and the majority of its peers this morning as Theresa May holds a Brexit crisis meeting with her cabinet.
This comes after the Commons hosted another round of indicative votes on Monday evening, with MPs again unable to agree on how to proceed, narrowly rejecting options for so-called ‘common market 2.0’, a customs union and a second referendum.
Observers suggest that the PM is now considering bringing her withdrawal deal back before Parliament for a fourth time despite it being overwhelmingly rejected by MPs three times already.
Some analysts even suggest today’s marathon cabinet meeting may see May and her cabinet mull the possibility of calling a general election in an effort to break the Brexit deadlock, the possibility of which will give some GBP investors reason to pause this morning.
Contraction in UK Construction PMI also Limits Appeal of Sterling
Further limiting the appeal of the Pound (GBP) this morning is the release of the UK’s latest Construction PMI.
According to data published by IHS Markit, the UK’s construction sector contracted for a second consecutive month in March, with the index coming in at just 49.7 – only a modest improvement from the 49.5 registered in February.
Analysts suggested that Brexit uncertainty continued to cripple the construction sector last month, with clients reluctant to commit to any major investments.
Jonathan White, UK head of infrastructure, building and construction at KPMG, said:
‘There continues to be a stall on investment plans across the construction sector, especially in commercial work, and until the Brexit conundrum is resolved we don’t expect order books to pick up.
‘It’s going to be a similar story for the months to come as we wait for more clarity to help make informed business decisions.’
GBP/CAD Exchange Rate Forecast: UK Services PMI to be Side-lined by Brexit?
Looking ahead, potentially driving movement in the Pound Canadian Dollar (GBP/CAD) exchange rate tomorrow morning will be the release of the UK’s latest services PMI.
This may dent the appeal of Sterling as economists forecast growth in the UK’s dominant sector will have slipped closer to stagnation in March.
However, GBP investors are likely to remain wary of further Brexit and political developments emerging over the coming week, potentially limiting the impact of the PMI figures on the Pound.
Meanwhile, CAD investors are likely to be focused on the end of this week’s session and the release of Canada’s latest employment report.
This may see the Canadian dollar struggle as analysts forecast that employment growth will have almost stagnated in March.