Pound Canadian Dollar (GBP/CAD) Exchange Rate Sinks as Boris Johnson Downplays Brexit Deal Hopes

September 23, 2019 - Written by John Cameron

STORY LINK Pound Canadian Dollar (GBP/CAD) Exchange Rate Sinks as Boris Johnson Downplays Brexit Deal Hopes

GBP/CAD Exchange Rate Falls as No-Deal Brexit Fears Continue to Haunt UK Markets

The Pound Canadian Dollar (GBP/CAD) exchange rate eased to around CA$1.651 today following Prime Minister Boris Johnson’s downplaying of a Brexit deal emerging over the course of the UN summit – in which he will meet various European leaders – this week.

Mr Johnson said:

‘I don’t wish to elevate excessively the belief that there will be a New York breakthrough. I’m not getting pessimistic – we will be pushing ahead, but there is still work to be done.’

As a result, Sterling has remained subdued today as no-deal Brexit fears continue to haunt UK markets.

Pound traders are also increasingly concerned over the Conservative Government’s response to the UK Supreme Court’s ruling on the suspension of Parliament.

Many analysts regard it unlikely that Boris Johnson will heed the legislation to reopen Parliament, thus further exacerbating fears that the Government could also maintain its hard-Brexit position despite the legal ramifications.

CAD/GBP Exchange Rate Edges Higher as Canadian Wholesale Figure Hits Fastest Rate of Growth Since 2016

The Canadian Dollar rose against the Pound following today’s release of July’s Canadian wholesale sales figure which beat forecasts and rose from 0.7% to 1.7% – its fastest gain since 2016.

Avery Shenfield, Chief Economist at CIBC Capital Markets, commented:

‘[The rise in sales] will provide a much needed lift to what otherwise looks like a lacklustre GDP print for July.’

However, the Eurozone’s economic weakness and the recovery of Saudi Arabia’s oil output has weighed on the price of oil, putting further tensions on one of Canada’s major exports.

Analysts at Reuters commented:

‘Saudi Arabia's ability to quickly restore oil production after the attacks, which hit at the heart of the Saudi energy industry and intensified a decades-long struggle with arch-rival Iran, would demonstrate an important degree of resilience to potentially very damaging shocks.’

GBP/CAD Forecast: UN Summit Brexit Breakthrough Could Bolster Pound

Pound traders will be waiting for tomorrow's release of August’s UK public sector net borrowing figure, which is expected to improve from £-1.971 billion to £6.650 billion.

Canadian Dollar investors, meanwhile, will be focusing on global economic and political developments for the rest of this week, with a dearth of economic data until next week.

The ‘Loonie’ could improve if US-China trade tensions show any signs of improving, as this would benefit the trade-reliant Canadian economy.

The GBP/CAD exchange rate could edge higher this week if Boris Johnson succeeds in securing a compromise Brexit deal with the EU during the UN summit.

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TAGS: Canadian Dollar Forecasts Pound Canadian Dollar Forecasts