GBP/CAD Exchange Rate Flat as UK Markets Anticipate Anti No-Deal Bill
The Pound Canadian Dollar (GBP/CAD) exchange rate steadied at CA$1.617 this morning as UK markets anticipated the implementation of Labour MP Hilary Benn’s anti-no-deal bill. The bill passed first and secondary votes yesterday with a majority of 327 to 299 and 329 to 300 respectively.
Political news is likely to remain a driving force for GBP/CAD movement today, as Prime Minister Boris Johnson has until October 19 to negotiate a deal with the EU, or gain parliamentary approval for a no-deal.
Beyond the deadline, Mr Johnson must request a Brexit extension from the EU. However this requires unanimous assent from European leaders and some countries have already indicated they see no merit in an extension.
Nevertheless, with a no-deal Brexit seemingly shelved, Sterling traders have shown increased optimism in the UK economy and today’s quiet UK data calendar ensures political developments are set to hold the spotlight.
Meanwhile, CAD investors will be looking forward to today’s speech by Lawrence Schembri, Deputy Governor of the BoC. Any dovish signals could see the Canadian Dollar sink against the Pound.
CAD/GBP Exchange Rate Steadies as Trade Conflicts Weigh on Canadian Economy
The Canadian Dollar (CAD) failed to gain on the Pound today as the Bank of Canada (BoC) firmed the interest rate at 1.75%. The central bank also prompted speculation for near-term rate cuts by acknowledging the impact escalating US-China trade conflicts have had on the Canadian economy.
Brian DePratto, an Economist at TD Bank, warned of a potential rate cut in October:
‘Reading between the lines, nearly every positive note in [the BoC’s rate] statement was balanced by a qualifier. Even if the [central bank] has not telegraphed an October rate, we believe the backdrop makes [a rate cut] the most likely outcome.’
GBP/CAD Outlook: Data Could Benefit ‘Loonie’ as UK Politics Drive Pound
Tomorrow’s Canadian net change in employment figures for August is predicted to improve from
-24.2K to 15.0K and could see the ‘Loonie’ hold its own against a strong Pound.
Meanwhile, political news looks set to drive Sterling movement into next week, with the focus on a House of Lords debate over no-deal legislation. If the bill passes, this could provide a boost to the GBP/CAD exchange rate.