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Canadian Earnings Jump to 15-Month High as Pound Sterling Canadian Dollar (GBP/CAD) Exchange Rate Left Flat

July 25, 2019 - Written by John Cameron

Pound Canadian Dollar (GBP/CAD) Exchange Rate Muted despite Canadian Earnings Rising at Fastest Rate in 15-Months

The Pound Sterling Canadian Dollar (GBP/CAD) exchange rate remained flat and the pairing is currently trading at an inter-bank rate of CA$1.6395.

On Thursday afternoon data revealed that Canada’s average weekly earnings rose by 3.4% in May.

This was the highest annual increase since February 2018, which provided CAD with an upswing of support.

Added to this, tensions in the Middle East pushed up the price of oil.

A week after reports showed Iran had seized a British-flagged tanker, Britain’s Ministry of Defence stated the Royal Navy had been ordered to accompany UK-flagged ships through the Strait of Hormuz.

However, this could do little to buoy the ‘Loonie’ as the pairing remained muted thanks to a temporary end to Brexit uncertainty.

Boris Johnson: UK Will Leave the EU in October, ‘No ifs, No Buts’

Meanwhile, speaking to MPs, the UK’s new Prime Minister Boris Johnson promised that his premiership was the ‘beginning of a new golden age’.

The PM stated that Minister Michael Gove would make planning for the possibility of a no-deal Brexit a ‘top priority’.

On Wednesday it was revealed the Prime Minister had given key roles in his Cabinet to leading Brexiteers.

This included Sajid Javid as Chancellor, Dominic Raab as Foreign Secretary and Priti Patel as Home Secretary.

Johnson also reaffirmed his stance on Brexit this morning as his new Cabinet met for the first time, stating the UK would leave the EU at the end of October, ‘no ifs, no buts’.

However, it has been noted that while Johnson’s win caused the Pound to rise this was due to a temporary easing of the Brexit uncertainty that has plagued GBP for months.

Added to this, since May the Pound has lost more than 5% of its value.

Commenting on this, Marshall Gittler, Currencies Analyst at ACLS Global stated:

‘Sentiment towards the Pound doesn’t seem to have improved – on the contrary, three-month risk reversals continue to decline, showing that people are getting increasingly negative on the currency.

‘So I believe this is just a temporary respite and I remain long-term bearish on GBP.’

Canadian Dollar (CAD) Flat Ahead of Face-to-Face US-China Talks

On Wednesday the White House revealed US negotiators are travelling to Shanghai to meet Chinese officials.

The face-to-face meetings are scheduled to continue from 30 July.

Both Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will travel to China to meet Chinese Vice-Premier Liu He.

Speaking to reporters at the White House, Mnuchin noted:

‘There’ll be a few more meetings before we get a deal done.

‘I wouldn’t expect that we’ll resolve all the issues. But the fact that we’re back at the table at the direction of the two presidents is important.’

However, this did little to buoy the ‘Loonie’ which was left muted against Sterling.

Pound Canadian Dollar Outlook: Will Successful US-China Talks Buoy CAD?

Looking ahead, it is likely the Canadian Dollar (CAD) will rise against the Pound (GBP) ahead of next week’s the US-China trade talks.

The ‘Loonie’ could receive an upswing of support if reports suggest face-to-face talks in Shanghai will make significant progress.

Meanwhile, it is likely Sterling will fluctuate as the focus shifts to Boris Johnson and his plans to renegotiate a Brexit deal with the EU.

If reports suggest that it is unlikely Johnson will be able to negotiate a fresh deal with the EU, the Pound Canadian Dollar (GBP/CAD) exchange rate could slide.
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