Pound Canadian Dollar Exchange Rate Weakens amid UK Political Uncertainty
The Pound Canadian Dollar (GBP/CAD) exchange rate is struggling to find support this morning as UK political uncertainty weighs on Sterling sentiment.
At the time of writing the GBP/CAD exchange rate is trading around CA$1.582, which is roughly down 0.3% from this morning’s opening rate.
The Pound (GBP) Falls as Political Tensions Boil Over
The Pound (GBP) is down against the majority of its peers this morning as the political landscape within the UK continues to worsen.
An eighth Tory MP, Sheryll Murray, has called for Prime Minster Liz Truss to resign as her cabinet is left in disarray following the unexpected departure of Home Secretary Suella Braverman yesterday.
Braverman tended her resignation over security concerns. Critics were led to believe Chancellor Jeremy Hunt was somehow involved. Dozens of conservative MPs are also facing disciplinary action or losing the party whip after last night’s chaotic fracking vote.
The 1922 Committee is due to meet later today, which is further dragging on the Pound. The members will be discussing Truss’s future as prime minister.
Bill Blain, strategist at Shard Capital, said that the markets had been watching recent events unfold ‘in a kind of stunned, open-mouthed horror’.
He also said:
‘Because it looks like competent politics are broken, that’s creating the volatility that we’re seeing in markets. And I’m afraid that’s going to continue. Whatever it is that Liz Truss tries to do to introduce stability, it just creates more chaos.’
Canadian Dollar (CAD) Gains Limited Despite Oil Price Uptick
The Canadian Dollar (CAD) is up against GBP, but is trading sideways against most of its other peers this morning, despite oil markets continuing to recover from soft prices yesterday.
At the time of writing WTI crude oil is trading around $87 per barrel, up from yesterday’s low of $82.
The increase of crude prices is attributed to The Organization of the Petroleum Exporting Countries (OPEC) cut in oil production. OPEC members are set to cut production by 2 million barrels per day from November.
Further adding to supply concerns is the European Union’s approaching ban on Russian crude oil. Oil markets are worried that the ban and the production cut combined could cause further volatility in the market.
Pound Canadian Exchange Rate Forecast: UK Politics Remain Key Risk for Sterling
Looking ahead, movement in the Pound Canadian Dollar exchange rate is likely to remain tied to UK political developments.
This could see Sterling trade with considerable volatility today as observers are expected another dramatic day in UK politics.
Turning to tomorrow, the UK’s latest retail sales release could place additional pressure on Sterling. Economists predict another contraction in sales growth in September.
Canada’s retail figures for August are also due tomorrow and are expected to report a rebound in sales growth last month. Could a better-than-expected result give CAD exchange rates a lift?
In the meantime, the commodity-linked ‘Loonie’ will likely continue to move according to trade within the oil markets.