Pound Canadian Dollar (GBP/CAD) Exchange Rate Jumps on Fresh Wave of Brexit Optimism
The Pound Canadian Dollar (GBP/CAD) exchange rate jumped this morning and is currently trading at around CA$1.6585.
The pairing were left volatile as European Council President Donald Tusk received ‘promising signs’ from Ireland and noted that there was still time to avoid a chaotic no-deal Brexit. The development buoyed Sterling against the Canadian Dollar despite investors remaining jittery after a week of ambiguous signaling, falsified news and general Brexit uncertainty.
The unexpected wave of optimism comes ahead of talks between UK Brexit Secretary Stephen Barclay and the EU’s chief negotiator, Michel Barnier.
Pound sentiment started to rise on Thursday as UK-Ireland Brexit discussions saw Irish Taoiseach, Leo Varadkar suggest a deal could be reached before the Halloween deadline.
Varadkar said that talks were at a ‘very sensitive stage’ but had been ‘very positive and very promising’. The Irish leader added: ‘I do see a pathway towards an agreement in the coming weeks.’
Canadian Dollar (CAD) Slides despite 2% Oil Price Hike
The oil-sensitive Canadian Dollar slumped today despite oil prices climbing around 2% at the end of the week.
Fears that Iran could face supply disruptions came as a state-owned oil tanker was struck by two missiles in a ‘terror attack’ on Friday morning. The Sinopa suffered considerable damage and is leaking oil into the Red Sea.
The attack echoes last month’s drone assault on two Saudi Arabian oil plants which took out more than half the country’s output.
Asia Pacific market strategist at AxiTrader, Stephen Innes commented on the incident,:
‘Spare capacity remains fragile and with supply chain vulnerability a worrying concern at virtually every Middle East oil field, traders continue to hedge supply risk premium.’
However, a fresh wave of Brexit optimism overshadowed the jump in oil prices, causing the ‘Loonie’ to slide against the Pound.
‘Very, Very Good’ US-China Trade Talks Spark Upswing in Risk Appetite
The ‘Loonie’ fell against Sterling as the first day of high-level trade talks between the US and China came to an end, with the meeting described as positive.
This sparked an upswing in risk-appetite, with some business groups even suggesting that the end of the trade war could well be in sight.
US President Donald Trump is due to meet Chinese Vice Premier Liu He at the White House today. Commenting ahead of the meeting, Trump said that the US ‘had a very, very good negotiation with China’. A more reticent White House official described the talks as ‘probably better than expected’.
However, analysts at OCBC Bank in Singapore were dubious:
‘All it takes is one tweet, one headline to change the landscape. The current situation points to a heavy USD posture, but given the shifty sentiments, we urge caution in excessively chasing the risk-on trades higher.’
Pound Canadian Dollar Outlook: Will Wage Growth Buoy CAD?
Looking ahead to this afternoon, the Canadian Dollar (CAD) could edge up against the Pound (GBP) following the release of Canada’s employment and wage growth data.
If September’s unemployment rate edges down and average hourly wage growth beats expectations, the ‘Loonie’ is likely to rise.
Meanwhile, if the current upswing of support from Brexit optimism prevails into next week, Sterling will continue to rise, which could leave the pairing muted.