Pound Canadian Dollar (GBP/CAD) Exchange Rate Muted as US Hits Mexico with 5% Tariffs
UPDATE: The Pound Sterling Canadian Dollar (GBP/CAD) exchange rate remained muted and the pairing is currently trading at an inter-bank rate of CA$1.7051.
On Friday risk-appetite diminished which likely dampened the risk-sensitive ‘Loonie’.
Self-proclaimed ‘tariff man’ US President Donald Trump unexpectedly hit all goods coming from Mexico with 5% tariffs.
Commenting on the risks of the tariffs, Chief Economist at UBS Global Wealth Management, Paul Donovan said:
‘If Mexican goods are taxed, US consumers will find it harder to evade the China trade taxes.
‘The bigger economic risk is uncertainty. The US economy, and the world economy, has spent a quarter of a century building growth on long, complex supply chains.
‘Reshaping supply chains is an additional and economically unnecessary cost. If investment is cancelled and employment reduced, then the risk of a recession increases significantly.’
Pound Canadian Dollar (GBP/CAD) Exchange Rate Slides as Trump says China ‘Would Love’ US-China Trade Agreement
UPDATE: The Pound Sterling Canadian Dollar (GBP/CAD) exchange rate fell and the pairing is currently trading at an inter-bank rate of CA$1.7021.
The risk-sensitive Canadian Dollar rose against Sterling on Thursday afternoon following comments from US President Donald Trump.
Trump said that the US was doing well in trade talks with China, and that Beijing wished to make a deal with America.
Speaking to reporters as he left the White House, the President stated:
‘China would love to make a deal with us. We had a deal and they broke the deal. I think if they had to do it again they wouldn’t have done what they did.
‘China is subsidizing products, so the United States taxpayers are paying for very little of it.
‘I think we’re doing very well with China.’
Pound Canadian Dollar (GBP/CAD) Exchange Rate Muted as Barnier Warns Brexit Deal is not open for Renegotiation
The Pound Sterling Canadian Dollar (GBP/CAD) exchange rate remains muted and the pairing is currently trading at an inter-bank rate of CA$1.7061.
Brexit pessimism has continued to plague Sterling as the risk of a no-deal Brexit increases once again.
During an interview the European Union’s Chief Brexit Negotiator, Michel Barnier, warned Tory leadership candidates that the UK Withdrawal Agreement is not open for renegotiation.
In the interview for the New York Review of Books, Mr Barnier stated:
‘If the UK wants to leave in an orderly manner, this treaty is the only option. If the choice is to leave without a deal – fine. If the choice is to stay in the EU – also fine. But if the choice is still to leave the EU in an orderly manner, this treaty is the only option. This is all that our legal constraints allow.’
Canadian Dollar (CAD) Flat despite Upbeat BoC
On Wednesday the Bank of Canada (BoC) left interest rates unchanged at 1.75% for the fifth time.
Governor of the BoC, Stephen Poloz, expressed growing confidence in the Canadian economy, providing the ‘Loonie’ with an upswing of support.
The bank chief further stated recent data highlighted that ‘the slowdown in late 2018 and early 2019 was temporary.’
This rate statement came amid further concern the US and China are escalating trade tensions as Chinese media warned that the government could restrict the sales of rare earths to the United States.
Speaking to BNN Bloomberg, Deputy Chief Economist at CIBC World Markets, Benjamin Tal said:
‘They are trying to signal to people that they are not going to cut rates any time soon. The bank is saying: I am not cutting, read my lips.’
Sterling (GBP) Flat as BoE Deputy Governor Warns No-Deal Brexit ‘Biggest Risk’ to UK
On Thursday morning, Deputy Governor of the Bank of England (BoE), Dave Ramsden gave a speech about ‘resilience’ following the financial crisis.
In a discussion about Brexit, the deputy governor said he was cautious and would wait and see what the effects of a no-deal were before altering monetary policy.
Ramsden argued that a no-deal is ‘unarguably [the] biggest risk to the UK economy and UK financial stability.’
Pound Canadian Dollar Outlook: Will Higher-than-Forecast Canadian GDP Buoy CAD?
Looking ahead to Friday, the Pound (GBP) could rise against the Canadian Dollar (CAD) following the release of the UK GfK consumer confidence.
If May’s data reveals consumers are more confident, it could provide Sterling with an upswing of support.
Meanwhile, the ‘Loonie’ could rise on Friday afternoon following the release of the Canadian GDP data.
If data reveals the Canadian economy has expanded more than forecast in the first three months of 2019, the Pound Canadian Dollar (GBP/CAD) exchange rate could slide.