The Pound to Canadian Dollar (GBP/CAD) exchange rate surged higher last week, on the back of considerable Brexit optimism
What’s Been Happening: Pound Surges on Brexit Optimism
The Pound rocketed higher against the Canadian Dollar last week, with the pairing’s initial gains coming in response to the UK and EU’s agreement to extend Brexit trade talks after missing the previous deadline.
This uptick in Sterling sentiment was then bolstered by some positive comments from EU officials, with both the EU’s chief Brexit negotiator, Michel Barnier, and European Commission President, Ursula von der Leyen, both expressing optimism that a trade deal could be reached.
However, the Pound was unable to sustain its best levels, with GBP exchange rates weakening towards the end of the week after Boris Johnson warned a deal would not be struck without a substantial shift from the EU.
The Canadian Dollar, meanwhile, sought to temper its losses against the Pound last week, as the commodity-linked currency found support from a solid uptick in oil prices.
Three Things to Watch Out for This Week
1. Coronavirus Headlines
The emergence of a new, more infectious strain of Covid-19 in the UK has already caused considerable volatility in GBP exchange rates this week, with the Pound vulnerable to losses if it forces the UK government to impose another lockdown.
2. Brexit Developments
Also driving Sterling sentiment this week will be the ongoing Brexit saga, Will the UK and EU manage to reach a trade deal this week, or will a continued stalemate propel the Pound lower?
3. Canadian GDP
In the spotlight for CAD investors will be the publication of Canada’s latest monthly GDP release, where a slowing of growth in the October may weigh on the ‘Loonie’.
The GBP/CAD exchange rate is likely to remain highly volatile in the run up to Christmas as Brexit and coronavirus jitters dominate market sentiment.