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Pound Canadian Dollar (GBP/CAD) Exchange Rate Rises despite Apprehension over May?s Brexit ?Plan B?

January 21, 2019 - Written by John Cameron

GBP/CAD Exchange Rate Increases as House Prices Rise

The Pound Canadian Dollar (GBP/CAD) exchange rate is up today and is currently trading around CA$1.7077 on the inter-bank market.

The Pound (GBP) gained on the Canadian Dollar (CAD) despite today’s publication of the UK Rightmove house price index for January, which showed its weakest start to the year since 2012 with a rise of 0.4%.

Rightmove Director, Miles Shipside, remained optimistic, noting that potential buyers were beginning to ignore political uncertainty with Rightmove website viewers increasing up to 5% from last year.

Shipside said:

‘[Potential buyers are] ignoring the politics and continuing to satisfy their housing needs, and as long as these fundamentals remain in place through this period of uncertainty, the market will keep moving.’

Pound investors are remaining apprehensive today as Prime Minister Theresa May presents her Brexit ‘Plan B’ to the House of Commons, which remains bitterly divided as MPs rally against a possible no-deal.

Conservative Business Minister Richard Harrington commented that a chaotic Brexit would be an ‘absolute disaster’, further echoing the Labour leader Jeremy Corbyn who refuses to partake in cross-party talks over May refusing to remove a no-deal from the table.

Canadian Dollar Pound (CAD/GBP) Exchange Rate Drops as ‘Loonie’ Weakens on Global Trade Disruptions

Today will see no publications of any Canadian economic data, with the ‘Loonie’ likely to remain sensitive to political developments instead.

The Canadian Dollar has been increasingly weakened by global trade disruptions – with Canada’s relationship with China having deteriorated since the arrest of Huawei’s Chief Financial Officer last year – and Canada’s heavy reliance on exports, such as oil, being negatively affected as a result, which has had some CAD investors fleeing for safe-haven currencies.

Canadian Dollar traders have also remained unconvinced by Finance Minister Bill Morneau’s recent bullishness.

Morneau said:
‘We’re not actually looking right now with any expectation of difficult times . . . Obviously, we’re in a difficult diplomatic moment [but our] ongoing goal, of course, is to have long-term economic relationships around the world that ensure that people can have good jobs here in Canada.’

The Canadian Dollar has continued to struggle against Sterling despite Friday’s publication of the Bank of Canada’s (BoC) core CPI figures showing a rise of 1.7% – potentially increasing the likelihood of a BoC rate hike on signs of increasing inflation.

GBP/CAD Forecast: May’s Brexit ‘Plan B’ to Determine Pound Rates

Sterling traders will be awaiting tomorrow’s publication of the UK average earnings – excluding bonus – figures for January, with GBP potentially benefiting from any signs of an increase.

Tomorrow will also see the publication of the UK ILO unemployment rate figures for January, which are expected to print at 4.1%.

CAD investors, meanwhile, will be looking ahead to Wednesday’s publication of Canada’s retail sales figures for November, which are expected to print at -0.5%, likely dampening sentiment in the ‘Loonie’.

The GBP/CAD exchange rate will be significantly affected by the House of Commons’ reaction to Theresa May’s Brexit ‘Plan B’ today, which will determine the tone of political debates between the UK and the EU in the coming week.

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