Pound to Canadian Dollar Exchange Rate Regains Half of Last Week’s Losses
Fresh speculation that UK Prime Minister Boris Johnson could address concerns about his Brexit plans has helped to extend the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate’s rebound this week.
Despite a lack of solid optimistic developments for the Pound (GBP) this week, GBP/CAD has climbed up to the interbank level of 1.71 from this week’s opening levels of 1.68.
This meant that GBP/CAD has regained around half of last week’s huge losses and worst level in over two months. GBP/CAD plummeted from the level of 1.74 last week.
A rebound in oil prices has not been enough to keep the Canadian Dollar (CAD) strong. The Canadian Dollar is being weighed by this week’s weaker than expected Canadian ecostats.
Pound (GBP) Exchange Rates Gain on Rival Weakness, Brexit Speculation
Despite persisting no-deal Brexit fears and warnings about UK deflation, the Pound (GBP) saw a notable rebound attempt today.
Sterling’s gains were due to numerous factors. This includes weakness in rivals like the Canadian Dollar (CAD) and US Dollar (USD).
For one thing, the British currency benefitted from speculation that UK Prime Minister Boris Johnson could look to address concerns with his plans to rewrite the Brexit withdrawal agreement.
Yohay Elam, Analyst at FXStreet, said:
‘A Brexit compromise is always good news for the pound – which has been extending its recovery. PM Boris Johnson has been seeking to soothe concerns about the controversial Internal Markets bill that passed the first hurdle in parliament. Several members of the PM’s ruling Conservative Party have either abstained or voted down the legislation – and others were expected to follow’
On top of this, news that the UK government had extended support for struggling businesses also helped the Pound.
Government extends support to stop business evictions this yearhttps://t.co/UimcCo3FyB
— Andy Bruce (@BruceReuters) September 16, 2020
Canadian Dollar (CAD) Exchange Rates Pressured by Data despite Stronger Oil
Prices of oil, Canada’s biggest export, have been climbing this week. Prices have been rising due to issues with production and unexpected drops in US inventories.
However, while this would normally lead to Canadian Dollar (CAD) gains, the currency remains under pressure.
Investors have been hesitant to buy the Canadian Dollar ahead of this evening’s Federal Reserve policy decision. As Canada’s economy is close to the US economy, Fed news has the potential to influence CAD.
The Canadian Dollar has also been pressured by this week’s disappointing Canadian data. Canadian manufacturing and inflation rate figures both came in notably lower than analysts forecast in recent sessions.
Pound to Canadian Dollar (GBP/CAD) Exchange Rate Awaits Brexit, Central Bank News
The Pound (GBP) is rebounding higher today, but whether or not the British currency can sustain any strong gains may depend on factors like Brexit developments.
There is speculation that the UK government could soften its position on controversial plans to rewrite the Brexit withdrawal agreement.
However, if the government maintains a hard stance or UK-EU negotiations show signs of collapse, the Pound could quickly shed this week’s recovery attempts.
Aside from potential Brexit developments, upcoming central bank news could also drive currency movement.
This evening will see the Federal Reserve hold its September policy decision. Surprising news could impact the Canadian Dollar (CAD) due to its close relationship with the US Dollar (USD).
Tomorrow’s Bank of England (BoE) policy decision will also be closely watched. If the BoE signals that looser monetary policy could be on the way, the Pound to Canadian Dollar (GBP/CAD) exchange rate will face even deeper pressure.