Pound to Canadian Dollar Exchange Rate Tumbles amid Rising Election Speculation
Despite gaining in the second half of August, the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate has quickly lost significant ground this week as fresh UK political and Brexit fears throttle the Pound (GBP).
Last week saw fairly notable GBP/CAD losses too, as the pair fell from the interbank level of 1.63 to 1.61.
Since yesterday, GBP/CAD has already shed around two cents and the interbank rate trends nearer a half-month-low of 1.59 at the time of writing.
The Canadian Dollar’s (CAD) strength has been mixed this week so far, and anticipation for the Bank of Canada’s (BoC) policy decision tomorrow is keeping investors hesitant to make big moves.
Pound (GBP) Exchange Rates Plummet as Markets Brace for Possibility of Snap Election
The Pound (GBP) has plummeted to its worst levels in half a month against the Canadian Dollar (CAD), and to its worst levels in years against some other major rivals like the US Dollar (USD).
Sterling has been in free fall since yesterday, as speculation that Britain could be headed for a snap general election rose.
Sterling’s losses worsened this morning. Markets digested news that UK Prime Minister Boris Johnson could call a general election on the 14th of October, if parliament attempts to block a no-deal Brexit.
With parliament reconvening today and MPs beginning a battle over no-deal Brexit, the Pound is in for further volatility and likely further losses. According to Elsa Lignos from Royal Bank of Canada:
‘Parliament reconvenes today. While the opposition MPs’ motion is expected to be tabled today, it will only move to a key vote tomorrow if MPs vote today to take control of Commons business – so a two-step process: vote to take control today, vote on the bill tomorrow (though if the first passes, the second is expected to also).’
Canadian Dollar (CAD) Exchange Rates Benefit from Canadian Economic Hopes
The Canadian Dollar (CAD) has seen mixed movement this week amid revived US-China trade war fears, but the currency has been able to benefit against a weak Pound (GBP).
Last Friday’s Canadian growth rate report beat expectations in major prints, bolstering hopes about the resilience of Canada’s economy and softening Bank of Canada (BoC) interest rate cut bets.
Prices of oil, Canada’s most lucrative commodity, have also strengthened for most of the past week and this has offered the Canadian Dollar a little extra support.
Still, many economists speculate the Bank of Canada (BoC) could signal an interest rate cut for the coming months during its September policy decision tomorrow. Uncertainty over the central bank’s possible tone is limiting CAD appeal.
Pound to Canadian Dollar (GBP/CAD) Exchange Rate Volatility to Worsen
The Pound to Canadian Dollar (GBP/CAD) exchange rate may see further sharp and sudden movements in the coming days, as UK markets buckle up for this week’s political and Brexit developments in parliament.
Parliament will reconvene from today until the end of the week, and MPs will attempt to quickly push through measures to prevent a no-deal Brexit.
However, if no-deal Brexit block attempts succeed, they may be followed by a snap general election which would also lead to significant weakness in the Pound (GBP).
While politics dominate the Pound’s movement, Canadian Dollar (CAD) investors are highly anticipating tomorrow’s Bank of Canada (BoC) policy decision.
Analysts expect the BoC will signal that an interest rate cut is in the way before the end of the year.
As a result, if the BoC is more hawkish than expected on Canada’s economic outlook the Pound to Canadian Dollar (GBP/CAD) exchange rate could see further weakness as CAD strengthens.