GBP/CAD Exchange Rate Edges Higher as Brexit Trade Talks Show Signs of Progress
The Pound to Canadian Dollar (GBP/CAD) exchange rate rose today, with the pairing currently trading around CA$1.726.
Sterling rose today on renewed hopes that the UK could secure a post-Brexit trade agreement with the European Union (EU).
Ursula von der Leyen, the European Commission’s President, is no reported to be in constant contact with Prime Minister Boris Johnson to secure a deal before Christmas.
Meanwhile, Michel Barnier, the EU’s Chief Negotiator, said that the two sides were ‘optimistic’ about securing a deal, saying that there was ‘political willing on both sides to get this over the line’.
As a result, GBP investors are becoming more optimistic that talks between the two sides could result in a post-Brexit trade agreement either before Christmas or January 1st.
However, following news of a new strain of Covid-19 in the UK, UK markets are remaining largely cautious as we head into the new year.
Added to this, there are also growing concerns that the whole of the UK could once again enter a national lockdown.
The Canadian Dollar (CAD) Dips as Oil Prices Continue to Fall
The Canadian Dollar (CAD) has been setback today as demand for the commodity-linked currency has slipped owing to a slump in oil prices.
Oil prices have been particularly volatile this week following news of a new variant of Covid-19.
Stephen Brennock, an analyst at PVM Oil Associates, commented:
‘Oil prices are wilting amid fears that the new strain will derail the fuel demand recovery.
‘If anything, it reaffirms that the path toward demand normalization is anything but smooth.’
As a result, demand for the oil-sensitive ‘Loonie’ has slipped as fears continue to grow over a significant setback for the global economy if Covid-19 cases continue to rise.
In Canadian economic news, today saw the release of October’s Gross Domestic Product report, which rose by 0.4%.
Statistics Canada’s report said:
‘The upward movement of real GDP continued to offset the steepest drops on record in Canadian economic activity observed in March and April.
‘Total economic activity was about 4% below February’s pre-pandemic level.’
GBP/CAD Forecast: Brexit Developments to Drive Pound
Canadian Dollar (CAD) traders will be awaiting tomorrow’s release of November’s Canadian Building Permits Data.
Any improvement in the report could boost the CAD/GBP exchange rate.
However, oil prices will likely continue to dictate the direction of ‘Loonie’, with any signs that oil prices could sink lower being CAD-negative.
Brexit will continue to drive the GBP/CAD exchange rate this week.
As a result, we could see Sterling head higher if UK-EU trade talks show signs of reaching a post-Brexit trade agreement.