The Pound to Canadian Dollar exchange rate suffered a startling sell-off last week as Boris Johnson sought to strike a more hardline stance on Brexit with a proposal to override part of the EU withdrawal bill.
Last Week: Pound Undermined as Boris Johnson Seeks to ‘Break International Law’
The Pound collapsed during last week’s session as Brexit uncertainty returned with a vengeance amidst a stark rise of tensions between the UK and EU.
This was centred on Boris Johnson’s proposal of his internal market bill, which would ‘break international law’ by overriding parts of the withdrawal agreement signed between the UK and EU last year.
The move unsurprisingly angered the EU and lead to the issuing of an ultimatum to drop the bill or jeopardise a potential trade deal, something which unnerved many GBP investors.
Meanwhile, the Canadian Dollar’s gains against the Pound were tempered somewhat by a rout in oil prices which reflected poorly on the commodity linked ‘Loonie’.
CAD exchange rates were also undermined by the Bank of Canada’s (BoC) latest policy decision as the bank’s forward guidance was viewed as dovish in tone.
Three Things to Watch out for This Week
1. Brexit Headlines
Brexit is likely to remain centre stage this week, potentially leaving the Pound vulnerable to additional losses if Boris Johnson continues to harden his stance on Brexit.
2. BoE Rate Decision
Also set to influence GBP exchange rates this week will be the Bank of England’s (BoE) latest policy decision. No policy changes are expected this month but GBP investors will continue to look out for any mention of negative interest rates.
3. Canadian Inflation
In focus for CAD investors this week will be Canada’s consumer price index. Will inflation have accelerated in August, or will another month of deflation take its toll on the Canadian Dollar?
Looking ahead, trade in the GBP/CAD exchange rate is likely to remain volatile over the coming week as Brexit continues to dominate market attention.