Pound Canadian Dollar Exchange Rate Slips on Northern Ireland Protocol Pessimism
The Pound Canadian Dollar (GBP/CAD) exchange rate is falling this morning as concerns that the Northern Ireland protocol deal could collapse.
At time of writing the GBP/CAD exchange rate is trading around $1.6285, a 0.25% slip from this morning’s opening levels.
Pound (GBP) Undermined by Waning Brexit Deal Optimism
The Pound is remaining fairly quiet this morning amid a lack of economic data. However, senior sources close to the Northern Ireland protocol deal have warned that an agreement is unlikely to be reached until next week.
Despite Prime Minister Rishi Sunak’s best efforts in getting the deal over the line, the week has been full of setbacks. Pushback from his own Conservative party has seen negotiations stall. Fears continue to mount that the negotiation could lose all momentum and potentially collapse. One such vocal critic, is the Democratic Unionist party (DUP) leader Sir Jeffrey Donaldson, who said:
‘Will (Sunak) agree with me that it is unacceptable that EU laws are imposed on Northern Ireland with no democratic scrutiny or consent?
‘Will he assure me that he will address these fundamental constitutional issues and do so not just by tweaking the protocol, but by rewriting the legally binding treaty text?’
Lending some modest support, however, was a hawkish speech from Bank of England (BoE) policymaker Catherine Mann. Speaking at the Resolution Foundation in London this morning, Mann reiterated the need to continue raising interest rates. She added:
‘Failing to do enough on rates now risks the worst of both worlds – higher inflation and lower activity. More tightening is needed, and a pivot is not imminent.’
Canadian Dollar (CAD) Supported by Modest Oil Price Rebound
Meanwhile, the Canadian Dollar is supported by recovering crude oil prices and an improving market mood.
The rebound in WTI crude follows yesterday’s slump to a two-week low amid reports of bigger-than-expected supply cuts from Russia. Despite fears of the Ukraine conflict escalating, a slight improvement in global risk sentiment could be supporting the riskier ‘Loonie’ today.
Elsewhere, the minutes from the Federal Open Market Committee (FOMC) policy meeting were released last night. A hawkish tone buoyed the US Dollar, and in turn supported the ‘Loonie’. Policymakers agreed more rate hikes were needed to bring inflation down.
Pound Canadian Dollar Forecast: UK Consumer Confidence to Weigh on Sterling?
Looking ahead to tomorrow, the Pound Canadian Dollar exchange rate could see further movement with the GfK measure of consumer confidence. Despite an expected climb, the reading will be still close to historic lows amid the cost-of-living crisis.
Meanwhile, oil prices could continue to impact the Canadian Dollar. With a modestly improving market mood, WTI crude could climb, bringing the ‘Loonie’ with it.