Pound Canadian Dollar (GBP/CAD) Exchange Rate Edges High as Leading Poll Suggests Tory Majority

GBP/CAD Exchange Rate Rises as Markets ‘All But Fully Discount a Good Tory Majority’

The Pound Canadian Dollar (GBP/CAD) exchange rate edged higher by 0.2% today, with the pairing currently trading around CA$1.744 as opinion polls continue to suggest a Conservative Party majority ahead of this week’s election.

This follows reports that the Tory’s extended their lead over the Labour Party by 14 percentage points in a Survation Poll for ITV’s Good Morning Britain this morning.

Elsa Lignos, Head of Strategy at RBC Capital Markets, commented:

‘[The Pound (GBP)] is rallying again after markets all but fully discount a good Tory majority, ignoring the high number of undecided voters – Friday will show whether that was a good strategy or not.’

With markets generally favourable of the Conservatives, due to their promise to resolve Brexit uncertainty by the end of January, the GBP/CAD exchange rate edged higher today as markets begin to factor in the now heightened likelihood of a Tory victory on 12th December.

CAD/GBP Exchange Rate Struggles After Weak Canadian Employment Data

The Canadian Dollar (CAD) struggled against the Pound (GBP) today after Friday’s disappointing Canadian employment data, with Canada losing 71,2 thousand positions instead of economist’s expectations of a 10,0 thousand uptick.

Royce Mendes, Senior Economist for CIBC Capital Markets, commented:

‘However, the fact that a significant portion of that narrowing came from a drop in employment, isn’t what policy-makers were hoping for. The Bank of Canada [BoC] seemed very content with the current setting of rates earlier this week, but if this trend continues there may be a need for a rate-adjustment yet.’

US-China trade uncertainties are continuing to hold back the global trade-reliant Canadian Dollar today.

This follows a fall in Chinese exports which added to concerns of the effects of the trade war between the world’s two largest economies.

Last week also saw Larry Kudlow, the White House Economic Adviser, announce a 15th December deadline to impose a new round of tariffs – costing around $156 billion – on Chinese imports.

Canadian Dollar investors will be looking ahead to today’s publication of the Canadian Building Permits figure for October, which are expected to ease by -2%, while Canadian Housing Starts for November are expected to rise from 202 thousand to 221.2 thousand.

GBP/CAD Outlook: UK General Election Developments in Focus

The UK’s political developments will continue to drive the Pound this week, with the general election due to go ahead on Thursday.

Any signs of the Tories losing their leading percentage in the opinion polls, however, could weaken the GBP/CAD exchange rate on heightened fears of a hung parliament this week.

Meanwhile, tomorrow will see the release of the UK manufacturing and industrial production figures for October, with any signs of improvement providing some uplift for the Pound as optimism for the British economy improves.

‘Loonie’ investors will be focusing on US-China trade developments this week, with any indications of the world’s two largest economies compromising on a ‘Phase One’ trade deal before the end of this year proving CAD-positive.

David Moore

Contact David Moore