GBP/CAD Exchange Rate Improves as Canadian Trade Surplus Narrows in June
The Pound Canadian Dollar (GBP/CAD) exchange rate rose today, leaving the pair trading around CA$1.604.
The Canadian Dollar (CAD) struggled against competing currencies as oil prices crashed following US President Donald Trump’s tariff clash with China.
Today’s plunge in oil prices weighed heavily on market confidence in the ‘Loonie’, oil being Canada’s most lucrative commodity.
Energy consultancy JBC Energy stated:
‘Crude has consolidated with a hefty rebound in early trading today, however volatility will likely remain high as the market gets a feel for potential Chinese retaliatory measures in the coming days.’
Today also saw the publication of Canadian trade figures, with trade surplus coming in narrow for June.
The Canadian international merchandise trade figures for June fell from $0.56 billion to $0.14 billion.
Stephen Tapp, the Deputy Chief Economist at Export Development Canada, remained upbeat:
‘It wasn’t a great month, but it’s been a very strong quarter. Canadian trade is kind of coming back down to earth after a long string of record-setting performance.’
GBP/CAD Exchange Rate Rises as Liberal Democrat By-Election Victory Tempers No-Deal Fears
The Pound (GBP) gained against the Canadian Dollar (CAD) today as no-deal Brexit concerns were offset by a Liberal Democrat victory in the Brecon and Radnorshire by-election. This left the Tory Government with a majority of 1.
This was perceived as a victory against increasingly hard line Conservatives and the Brexit Party.
In her acceptance speech, the leader of the Welsh Liberal Democrats Jane Dodds, explained:
‘People are desperately crying out for a different kind of politics. There is no time for tribalism when our country is faced with a Boris Johnson government and the threat of a no-deal Brexit.’
However, today also saw the release of the UK Markit Construction PMI for July, which came in worse-than-expected and remained in contraction territory at 45.3.
Tim Moore, an Economics Associate Director at IHS Markit, was sombre, saying:
‘UK construction output remains on a downward trajectory and another sharp drop in new orders has reduced the likelihood of a turnaround in the coming months.’
GBP/CAD Outlook: Global Trade Tensions and Brexit to Remain in Spotlight
Monday will see Canadian markets close for the August Civic Holiday.
Meanwhile, Sterling traders will be looking ahead to Monday’s publication of the UK Markit Services PMI for July.
Any sign of improvement would prove Pound-positive.
Canadian Dollar traders will be looking ahead to Wednesday’s release of the Ivey Purchasing Managers Index for July, which is predicted to improve.
The GBP/CAD exchange rate will likely remain volatile next week. The UK and EU appear unlikely to compromise over the controversial Irish backstop and global trade tensions over a no-deal Brexit seem likely to increase.