GBP/CAD Exchange Rate Rangebound Despite Upbeat Bank of Canada Statement
The Pound Canadian Dollar (GBP/CAD) exchange rate held steady this morning, with the pairing currently trading around CA$1.719 despite upbeat comments from Stephen Poloz, the Governor of the Bank of Canada (BoC), who said the Canadian economy was in a good place.
However, with the renewed Chinese coronavirus outbreak scare, market appetite for the risk-averse ‘Loonie’ has continued to remain limited today.
Professor David Heymann, Professor of Infectious Disease Epidemiology from the London School of Hygiene and Tropical Medicine:
‘The deaths are quite worrisome, there are an increased number of deaths reported, but if you look overall at the total number of deaths and the total number of cases, the fatality ratio is about the same as it has been – but it is still high, as high as the death rate in influenza.’
With the Canadian economy particularly vulnerable to a weakening global economy, any indications that China’s epidemic could affect the global supply chain weighs on the CAD/GBP exchange rate.
GBP/CAD Exchange Rate Steady, UK House Prices Receive ‘Champagne-Cork Reaction to Brexit’
The Pound (GBP) failed to make any headway on the Canadian Dollar (CAD) despite a better-than-expected UK RICS Housing Price Balance report for January, which saw an impressive rise from 0% to 17%.
James McKillop, a partner at the estate agency Knight Frank, commented on the data:
‘We’re seeing a bit of a champagne-cork reaction to Brexit and the election. What we cannot yet tell is how sustained the positive sentiment will be.’
UK political developments continue to remain in focus, however, with Prime Minister Boris Johnson due to begin his much-anticipated post general election cabinet reshuffle.
Due to rising uncertainty over the UK economy post-Brexit, Sterling traders are paying close attention to who will be appointed a part of the Government’s team going ahead.
The new composition of Boris Johnson’s new cabinet would provide a better view of how UK-EU trade talks will unfold this year. Any signs that the newly-appointed team could take a harder stance on Brexit, however, would prove Pound-negative.
GBP/CAD Outlook: Could ‘Loonie’ Sink on Rising Global Economic Uncertainty?
The Canadian Dollar (CAD) will continue to be driven by global economic developments this week, with any further signs that the coronavirus could have a negative effect on China’s economy weakening demand for the risk-averse ‘Loonie’.
The Pound (GBP), meanwhile, will continue to be dictated by Brexit developments, with any further signs that UK-EU trade deal could fall through before the end of the ‘transition period’ weakening GBP as economic uncertainty for the UK rises.