No-deal Brexit fears are keeping the Pound Canadian Dollar (GBP/CAD) exchange rate low. Amid a lack of progress in UK-EU Brexit negotiations over the past week, fears of talks collapsing this week are rising.
The Canadian Dollar has been able to benefit from Pound weakness. Hopes for economic recovery and strong commodity trade in 2021 are making oil prices more appealing and this is all boosting Canadian Dollar appeal.
Last Week: Oil Prices Keep Canadian Dollar Rising
Prices of oil, Canada’s biggest export, continued to climb on coronavirus vaccine hopes last week. This, combined with hopes for a recovery from the coronavirus pandemic next year, boosted the Canadian Dollar throughout the week.
The Pound’s movement last week was mixed. Earlier in the week, Brexit deal hopes pushed Sterling higher.
However, as the week drew on with no agreement in sight, no-deal Brexit fears began to rise and GBP/CAD fell more towards the end of the week.
Three Things to Watch For This Week
- Brexit Developments
Wednesday may be the final day of UK-EU Brexit negotiations. Unless there is an extension of talks, the Pound could plummet if no deal is reached in the coming day.
2. Bank of Canada (BoC) Policy Decision
The Bank of Canada (BoC) will hold its December policy decision tomorrow. If the bank ramps up dovishness due to Canada’s coronavirus issues, the Canadian Dollar could see fresh pressure.
3. UK October Data
Thursday will see the publication of UK trade, production and growth stats from October. However, if there is shocking Brexit news later in the week, UK data could be overshadowed.
The Pound to Canadian Dollar exchange rate could surge if there is a Brexit deal reached in the coming sessions, but plummet instead if talks collapse and no-deal Brexit fears worsen.