GPB/CAD Exchange Rate Steady as IMF Holds Forecast for Canadian Economy in 2019
The Pound Canadian Dollar (GBP/CAD) exchange rate is holding steady today, leaving the pairing trading around CA$1.1637.
The Canadian Dollar (CAD) remained flat against the Pound (GBP) following the International Monetary Fund’s (IMF) forecast that Canadian economic growth would remain at 1.5% for this year and 1.9% for 2020.
However, as the Canadian economy is particularly sensitive to tensions surrounding international trade, the IMF’s downgrading of its outlook for world economic growth has caused some concern for Canadian Dollar traders.
Gita Gopinath, the IMF’s Chief Economist, commented:
‘Dynamism in the global economy is being weighed down by prolonged policy uncertainty as trade tensions remain heightened despite the recent U.S.-China trade truce … and the prospects of a no-deal Brexit have increased.’
Ahead of next week’s likely rate cut from the US Federal Reserve, many ‘Loonie’ traders are also becoming concerned that the Bank of Canada (BOC) could be driven into taking similar action if economic indicators fail to show signs of improvement.
GPB/CAD Exchange Rate Rangebound as Boris Johnson Pledges October Brexit, ‘No Ifs, No Buts’
Pound Sterling (GBP) exchange rates managed to hold its ground following Prime Minister Boris Johnson’s announcement during his speech yesterday that the UK would leave the European Union on the 31 October, ‘no ifs, no buts’.
Mr Johnson has meanwhile sacked more than half of Theresa May’s cabinet, filling his new team with Brexiters, leaving many Sterling traders jittery that a no-deal between the UK and the EU now appears more likely.
Nick Boles, a former Tory MP, was downbeat about Mr Johnson’s new cabinet, saying:
‘The takeover that started in local constituency parties is now complete. The Brexit Party has won the war without electing a single MP. Boris Johnson isn’t our new prime minister, Nigel Farage is.’
Sterling however remained downbeat following the publication of the UK CBI Distributive Trades Survey figures for July, which fell to a worse-than-expected -16%.
As these fell for their third consecutive month – their longest period of decline since 2011 – this has caused some concern for Pound traders.
Rain Newton-Smith, a Chief Economist at CBI, commented:
‘The UK economy has reached a fork in the road. The new Prime Minister must now do everything in his power to achieve a good Brexit deal, thus protecting jobs and our economy.’
GPB/CAD Outlook: Analysts Forecast Sterling to Rise on Brexit ‘Honeymoon’ Period
Canadian Dollar traders will be focusing on global political and economic developments into next week, with no Canadian economic data due until next week.
Any indications of trade tensions rising between the US-China could begin to hold back the ‘Loonie’, as this would directly affect the global trade-sensitive Canadian economy.
The GBP/CAD exchange rate, however, is forecast to rise by some analysts on renewed hopes of a Brexit breakthrough now that Boris Johnson is Prime Minister.
Richard Franulovich, the head of Financial Strategy at Westpac, commented:
‘The selection of Boris Johnson resolves one UK uncertainty, with a likely “honeymoon” as his Cabinet forms. Newly elected EU officials and Brexit negotiators may be more open to discussions.’
We could therefore see the Pound begin to rise towards the end of this week.