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Pound Sterling Canadian Dollar (GBP/CAD) Exchange Rate Flat as Theresa May Announces Resignation

May 24, 2019 - Written by John Cameron

Pound Canadian Dollar (GBP/CAD) Exchange Rate Muted as PM Announces Resignation

The Pound Sterling Canadian Dollar (GBP/CAD) exchange rate remained muted and the pairing is currently trading at an inter-bank rate of CA$1.7075.

On Friday, Theresa May announced that she will resign as Prime Minister on 7 June making way for a new leader.

This caused the Pound to bounce briefly, however the Pound was left muted against the Canadian Dollar.

In her speech, the Prime Minister said it was the ‘honour of my life’ to be the ‘second female Prime Minister, but certainly not the last.’

Quoting Nicholas Winton, May stated ‘compromise is not a dirty word’ and it is something that will be needed to deliver Brexit.

This announcement came after May met with the leader of the 1922 Committee, Sir Graham Brady.

This came after a week of Brexit turmoil, in which Sterling was battered by Brexit pessimism as the Prime Minister faced growing opposition to her her ‘new’ Withdrawal Agreement.

Sterling (GBP) Flat as UK Retail Sales Stagnate

On Friday data revealed that retail sales in the UK were left flat in April.

In the three months leading to April, retail sales increased by 1.8%.

Online sales jumped 9.4% in the three-month period, a record high for the online retail sector.

This shows that Brexit has not had an impact on spending.

Commenting on this, Chief UK Economist at Pantheon Macroeconomics, Samuel Tombs said:

‘April’s retail sales figures are a timely reminder that political uncertainty us having no discernible impact on households’ overall spending. The stability of volumes in April is a good result, following recent strong gain.

‘Admittedly, warmer-than-usual weather – average temperatures were 1.1C above their 1970-to-2018 April average – probably temporarily stimulated clothing sales.’

Canadian Dollar (CAD) Muted as Trump Comments on ‘Very Dangerous’ Huawei

It is likely the ongoing trade tensions between the US and China has dampened sentiment in the risk-sensitive Canadian Dollar.

However, US President Donald Trump suggested that Huawei could be part of the US-China trade deal which likely reassured markets.

Overnight floated the idea that the Chinese telecoms giant could be part of the trade deal despite concerns the company could be a security risk.

Speaking to reporters, President Trump said:

‘Huawei is something that is very dangerous.

‘You look at what they’ve done from a security standpoint, a military standpoint. Very dangerous.

‘It’s possible that Huawei even would be included in some kind of trade deal.

‘If we made a deal, I can image Huawei being included in some form of, some part of a trade deal.’

Pound Canadian Dollar Outlook: Will a Dovish BoE Weigh on GBP?

Looking ahead to next week, the Pound (GBP) could slide against the Canadian Dollar (CAD) following the release of the UK inflation hearings report on Tuesday.

If the report reveals the Bank of England (BoE) is dovish about the inflation outlook, and do not expect core inflation to hit the bank’s target it could dampen sentiment in Sterling.

Meanwhile, the ‘Loonie’ could slide ahead of the Bank of Canada’s (BoC) interest rate decision and statement.

If reports suggest that the BoC is going to take an overly dovish stance, it is likely the Pound Canadian Dollar (GBP/CAD) exchange rate will rise.

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