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Pound Sterling Canadian Dollar (GBP/CAD) Exchange Rate Muted as No-Deal is a ‘Step into the Unknown’

July 8, 2019 - Written by John Cameron

Pound Canadian Dollar (GBP/CAD) Exchange Rate Flat as No-Deal Brexit ‘Fraught with Risk’

The Pound Sterling Canadian Dollar (GBP/CAD) exchange rate remained muted and the pairing is currently trading at an inter-bank rate of CA$1.6364.

The Pound remained under pressure at the start of the week as former UK Brexit Chief, Philip Rycroft warned against a no-deal Brexit.

Speaking to the BBC, he stated that everyone should worry about a potential no-deal as it was ‘fraught with risk’.

Rycroft, who resigned from his position after 18 months, also stated:

‘It’s not in the UK’s interest to have no deal, it’s not in the EU’s interest to have a no deal.’

‘I think everybody should be worried about what happens in a no-deal situation. We would be taking a step into the unknown.’

Tensions in the Middle East Cause Oil Prices to Rise

On Monday, last week’s better than forecast US jobs data and escalating tensions in the Middle East caused oil prices to rise.

However, the oil-sensitive ‘Loonie’ was left muted against Sterling.

Iran stated on Sunday that it would soon boost its uranium enrichment above the level set by the JCPOA, a 2015 nuclear deal.

Commenting on this, Vienna-based consultancy JBC Energy noted:

‘The weekend was dominated by Iran, with the announcement that uranium enrichment had breached JCPOA limits being greeted by a chorus of warnings from European states not to push enrichment too far.’

Added to this, US President Donald Trump, who pulled the US out of the deal last year stated:

‘If you enrich for one reason and I won’t tell you what that reason is but it’s no good. They’d better be careful.’

Canadian Dollar (CAD) Flat as Unemployment Edges Up From All-Time Low

Meanwhile, on Friday Statistics Canada revealed the economy had lost around 2,200 jobs in June.

The Canadian unemployment rate edged up from an all-time low of 5.4% in May to 5.5% in June.

The showed that 24,000 full time jobs while 26,000 part-time jobs were shed, and even with the small decline the labour market has had a strong start to 2019.

Added to this, Canadian wages have been on the rise.

Year-on-year, average hourly wages rose by 3.6% in June compared to the previous month’s rise of 2.55%.

This was the strongest reading since May 2018 and the second best in a decade.

However, this could do little to buoy the ‘Loonie’ on Monday morning.

Pound Canadian Dollar Outlook: Will Higher than Forecast Canadian Building Permits Buoy CAD?

Looking ahead to Tuesday, the Pound (GBP) could edge up against the Canadian Dollar (CAD) following the release of the BRC’s like-for-like retail sales.

If retail sales rebound in June, it could provide Sterling with an upswing of support.

Meanwhile, later in the afternoon the ‘Loonie’ could edge up following the release of the Canadian building permits.

If the number of permits continues to increase higher than forecast in May, the Pound Canadian Dollar (GBP/CAD) exchange rate could slide.

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