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Pound Canadian Dollar (GBP/CAD) Exchange Rate Eases as Brexit Uncertainties Increase

August 19, 2019 - Written by John Cameron

GBP/CAD Exchange Rate Sinks as Boris Johnson Remains Confident on UK-EU Talk Breakthrough

The Pound Canadian Dollar (GBP/CAD) exchange rate eased today, leaving the pairing fluctuating around CA£1.607 as no-deal Brexit fears continue to provide downward pressure on Sterling.

Meanwhile, Prime Minister Boris Johnson has said that he is ‘confident’ that the EU will concede on the controversial Irish backstop issue.

Mr Johnson said today:

‘They have seen that the UK parliament has three times rejected the withdrawal agreement, the backstop just doesn’t work, it’s not democratic and I hope that they will see fit to compromise but in the meantime we get ready to come out on October 31.’

Labour leader Jeremy Corbyn has continued to push for cross-party solidary against a no-deal Brexit.

However, Sterling traders are remaining cautious as a successful no-confidence vote in the Tory government is being perceived as unlikely to secure a majority.

Today saw the publication of the UK Rightmove House Price Index for August, which rose from -0.2% to 1.2%.

Rightmove Director Miles Shipside said:

‘While the end of October Brexit outcome remains uncertain, more buyers are now going for the certainty of doing a deal, with some having perhaps hesitated earlier in the year.’

CAD/GBP Exchange Rate Edges Higher on Healthy Domestic Economy

The Canadian Dollar (CAD) has edged higher against the Pound (GBP) despite ongoing fears of a global economic slowdown.

Farah Omran, an Economist at C.D. Howe Institute, commented:

‘We are currently at a time of a lot of uncertainty. Domestically the Canadian economy is doing fine. Housing seems to be rebounding while employment is good.’

However, ‘Loonie’ investors are becoming increasingly cautious as US-China trade tensions are showing no signs of abating.

As the Canadian economy is particularly reliant on global trade, this could begin to weigh on the Canadian Dollar.

Meanwhile, as oil is one of Canada’s most lucrative commodities, rising oil prices have provided some uplift in sentiment in the Canadian Dollar.

Giovanni Staunovo, an Oil Analyst at UBS, however, warned:

‘The oil market seems to be pricing in again a geopolitical risk premium following the weekend drone attacks on Saudi Arabia, but the premium might not sustain if it does not result in any supply disruptions.’

GBP/CAD Outlook: Brexit Uncertainties to Continue to Weigh on Sterling

Canadian Dollar traders will be looking ahead to tomorrow’s Canadian manufacturing shipment figure for June, which is expected to ease from 1.6% to -1.7%.

As a result, we could see the ‘Loonie’ begin to lose some of its gains against the Pound.

Meanwhile, Sterling investors will be looking ahead to Wednesday’s public sector net borrowing figure for June.

The GBP/CAD exchange rate is likely to remain subdued this week, with no-deal Brexit fears continuing to hold back Sterling’s gains.
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