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GBP CAD Exchange Rate Flat as Traders Examine UK?s Economic Future

September 28, 2017 - Written by Ben Hughes

On Wednesday’s trading session, the Pound rose against the Canadian Dollar from an opening rate of 1.6622 to close at 1.6730.

Pound Trades Tightly after BoE Governor Warns of Limited Powers



The Pound has failed to really pick up against the Canadian Dollar today, owing to continuing concerns about Bank of England (BoE) policy and the progress of Brexit talks.

For the former issue, traders have been looking at comments made by BoE Governor Mark Carney. The Governor has warned that the BoE cannot solve all the UK’s economic woes, because;

‘[As] the economy is facing profound structural change, the MPC can extend the horizon over which it returns inflation to target from above in order to balance the effects on jobs and activity.

Even though monetary policy cannot prevent the weaker real income growth likely to accompany the transition to new trading arrangements with the EU, it can influence how this hit to incomes is distributed between job losses and price rises’.


At the same event, former Prime Minister Gordon Brown issued a warning about a lack of provisions in case of a fresh financial crisis. Mr Brown said;

‘While there is now improved supervision of financial standards, reform must be intensified to prevent a future financial crash.

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Decisions to act cannot be left to bankers alone. Britain and the world urgently needs to get the balance right between the need for expertise, the need for proper accountability and the need for effective leadership. There will be no hiding place for the G20 or any government the next time’.


On the issue of Brexit, at a separate event Brexit Secretary David Davis gave a summary of the latest round of discussions. Delivering a typically positive outlook, Davis said;

‘We’ve made important progress and capitalised on the momentum created by the Prime Minister’s speech.

We are working quickly through a number of complex issues, yet there remain some points where further discussion and pragmatism will be required to reach agreement.

There are differences of opinion, but with the continued diligence and creativity of our teams, I am confident we can resolve these.

I leave Brussels optimistic about this future and I look forward to continuing the negotiations’.


Somewhat deflating Davis’ assertions, EU Chief Negotiator Michel Barnier has responded;

‘We've had a constructive week – yes – but we are not yet there in terms of achieving sufficient progress. Further work is needed in the coming weeks and months’.


All of these events have prevented the Pound from appreciating, given the uncertainty generated by these statements.

Canadian Dollar Static on Cautious Comments from BOC Governor



The Canadian Dollar has remained close against the Pound today due to a recent Bank of Canada (BOC) speech. Governor Stephen Poloz has to some extent disappointed traders, by not striking a hawkish tone.

Instead, Poloz has warned that while the BOC could follow a path of higher interest rates in the future, cuts could also take place.

The key statement was that ‘We will continue to feel our way cautiously as we get closer to home’, which has made traders uncertain about the next possible BOC policy decision.

Are Losses on the Horizon for GBP CAD Exchange Rate?



The Pound may plummet on Friday when high-impact UK ecostats come out.

First up will be the GfK consumer confidence measure for September. Although the previous reading improved from -12 points to -10, September is expected to see a worsening back to -11 points.

Given that Brexit talks have dominated headlines in recent weeks, it isn’t impossible that the confidence score will fall even further than expected.

The other notable announcement will come during the morning, covering final revisions to estimated GDP growth in the second quarter.

The quarterly reading is predicted to rise marginally, but a converse slowdown on the year is also expected. Generally speaking, the yearly result is considered more important, so these outcomes could devalue the Pound.

Finally, Bank of England (BoE) official Sir Jon Cunliffe will be speaking in Brussels during the afternoon, but he may not give any hints regarding BoE monetary policy.

As with the UK, Canada will be releasing GDP stats on Friday. These might not excite Canadian Dollar traders, given that they are predicted to show a decline in July from 0.3% to 0.1%.

The only other CA data of note will be the reported budget balance for July. A slide from a surplus into a deficit is expected, which might limit any CAD to GBP advance.
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