Pound to Canadian Dollar Exchange Rate down on Brexit Jitters and Canada Relief
Following a knife-edge Canadian Election yesterday, Prime Minister Justin Trudeau’s Liberal Party held onto power, and this as well as Brexit developments kept pressure on the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate today.
Due to Brexit hopes and trade jitters, GBP/CAD saw strong performance and gained over three cents last week, surging from the interbank level of 1.67 to 1.70. Yesterday, GBP/CAD briefly touched on a fresh 4-month-best level.
Since then though, political news has dragged GBP/CAD lower. At the time of writing on Tuesday, GBP/CAD is trending closer to the interbank level of 1.69 again.
For now, Pound to Canadian Dollar exchange rate investors are awaiting the next steps for Brexit, with just over a week until the 31st of October Brexit deadline.
Pound (GBP) Exchange Rates under Pressure as Brexit Uncertainty Could be Extended
The Pound’s (GBP) performance was highly impressive last week, as a new UK-EU Brexit deal was finally reached and investors speculated that UK Prime Minister Boris Johnson may even be able to pass it through domestic parliament.
However, while investors were hopeful yesterday, this week has complicated things thus far.
UK Parliament opted not to hold a meaningful vote on the Brexit deal on Saturday, following the passing of the Letwin amendment. Because of this though, House Speaker John Bercow said the meaningful vote couldn’t be debated again yesterday.
After Bercow blocked the meaningful vote, concerns worsened that the Brexit deal may not be secured in time for the current 31st of October Brexit date.
The rising likelihood of another long Brexit delay is weighing on Sterling slightly, as it could mean months more uncertainty.
Canadian Dollar (CAD) Exchange Rates Steady as Trudeau Secures Second Term
Following months of image scandals and a difficult election campaign, Canadian Prime Minister Justin Trudeau saw narrow victory in yesterday’s Canadian 2019 Federal Election.
Trudeau will lead Canada for another term, avoiding the fate of being one of the first majority-owning Prime Ministers to not win a second term in decades.
While Trudeau will now need to run a minority government due to the closeness of the election, it is predicated his Liberal Party will look to form alliances with other parties, such as the New Democratic Party (NDP).
Analysts predicted the Canadian Dollar’s (CAD) reaction to the election would be limited, and indeed the Canadian Dollar’s movement on the results has not been huge.
However, markets were slightly relieved by the expected continuation of the previous government. On top of this, the trade-correlated Canadian Dollar has benefitted from hopes that US-China trade relations could improve in the coming months.
Pound to Canadian Dollar (GBP/CAD) Exchange Rate Could Firm on Optimistic Brexit News
The Pound to Canadian Dollar (GBP/CAD) exchange rate is currently unappealing amid concerns for further Brexit uncertainty, but this also means that optimistic Brexit developments could help the pair to resume its recent rally.
Britain’s government will attempt to quickly push its Brexit plans through UK Parliament in the coming days in order to attempt to secure an exit by the 31st of October.
If the government’s Brexit plan is accepted by parliament, it would mean Britain has avoided a no-deal Brexit or a long Brexit delay, and the Pound (GBP) would rocket higher.
On the other hand, if the plans are blocked it could lead to fresh rounds of uncertainty and the Pound would tumble. Overall, the potential Brexit developments of the coming sessions will be pivotal for forex movement.
Now that Canada’s election has passed, any political uncertainty on cross-party negotiations could weigh on the Canadian Dollar (CAD) but overall the currency is expected to refocus on trade and Bank of Canada (BoC) speculation.
US-China trade developments, as well as upcoming Canadian retail sales and wholesale sales stats, will therefore also influence the Pound to Canadian Dollar (GBP/CAD) exchange rate in the coming sessions.