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GBP CAD Exchange Rate Skyrockets as UK Offers to Pay More for Brexit

November 29, 2017 - Written by John Cameron

The Pound Canadian Dollar (GBP CAD) exchange rate surged close to a six-month high this morning following reports that the UK government would be willing to offer more in its divorce bill with the EU.

Pound (GBP) Surges as UK Offers €50bn in Brexit Bill



Sterling sentiment continued to soar this morning as markets welcomed reports that the UK government would be willing to pay up to €50bn in order to cover its financial obligations to the EU, as part of the so-called Brexit bill.

While there appears to have been no official response to the offer from the EU or any real confirmation from the UK government, the offer is reported to have been given a ‘broad welcome’ by Brussels

Investors are hopeful that the improved offered from the UK will help to fuel progress in ongoing Brexit negotiations which have stalled again in recent weeks, with this also driving hopes that the two sides will be able to make ‘sufficient progress’ in talks before the EU summit next month, possibly allowing trade talks to finally get underway.

Kallum Pickering of Berenberg bank writes;

‘We expect UK PM Theresa May to present a formal offer on the Brexit bill, EU citizens’ rights, and the Irish border question at the upcoming 4 December dinner between May and EU Commission president Juncker. We expect the offer to meet the EU’s requirement for ‘sufficient progress’ on the Brexit divorce.’

‘If such progress is made, expect the UK and the EU to move negotiations on to potential transitional arrangements and post-Brexit trade at the 14-15 December EU Summit.’

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However some observers warn that questions remain over the Irish border and EU citizens’ rights and these two areas could still lead to negotiations staling, especially given Ireland’s threat to block the start of trade talks until guarantees are made that there will be no hard border with Northern Ireland.

Neil Wilson of City firm ETX Capital said;

‘The Irish border is still a major stumbling block and it is uncertain whether sufficient progress has been made on this front. This is an even more sensitive topic than the divorce bill and is not as easy to solve with a bigger cheque.’

Canadian Dollar’s (CAD) Weakened as Oil Prices Dip



Meanwhile the Canadian Dollar remains on the back foot this morning as oil prices continue to slip in advance of the Organization of the Petroleum Exporting Countries (OPEC) cartel meeting tomorrow.

Oil Investors are becoming increasingly jittery ahead of Thursday’s meeting when OPEC and its allies are expected to extend its crude production cuts past March 2018.

While most analysts agree that members will agree to further cuts they are a little more apprehensive over whether they will seek to scale back the pace of cuts, especially given that many members are likely to be happy enough with the current strength of prices.

Another worry is that the extension of production cuts have already been priced in and that any decision to scale back cuts in any manner could have a negative impact on prices.

Oil related exports account for roughly 15% on Canada’s total exports making the Canadian Dollar highly sensitive to movements in crude.

GBP CAD Forecast: Canadian GDP to Slow?



Looking ahead the GBP CAD exchange rate may continue to surge in the second half on the week as Canada publishes its latest GDP figures, with economists forecasting that domestic growth will have slowed significantly in the third quarter.

Meanwhile the Pound continued uptick will be reliant upon the EU’s official response to the UK’s €50bn Brexit bill offer, with a positive reaction likely to further strengthen Sterling.

Current Interbank Exchange Rates


At the time of writing the GBP CAD exchange rate was trending around 1.7217 and the CAD GBP exchange rate was trending around 0.5804.

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