October 21, 2019 - Written by Minesh Chaudhari
STORY LINK GBP to CAD Exchange Rate Struggles as Canada Heads to the Polls for Federal Election
Following a strong week for the British Pound to Canadian Dollar (GBP/CAD) exchange rate, this week could be poised to be even more hectic with the fate of the Brexit process and Canada’s 2019 Federal Election taking place. Amid these uncertainties, investors were hesitant to move too much on either the Pound or the Canadian Dollar and the pair ultimately trended within a tight region on Monday afternoon.
Last week saw GBP/CAD putting in impressive gains of over three cents, opening the week at the level of 1.6700 and closing at the level of 1.7036. Amid rising hopes that a Brexit deal could be made and a no-deal Brexit could be avoided, it was the third consecutive week of gains for GBP/CAD.
Since markets opened this morning, GBP/CAD briefly dipped before recovering and touching on a fresh four month high of 1.7052. At the time of writing, GBP/CAD was trending a little lower again, near the level of 1.7000.
GBP Exchange Rates Little Impacted as UK Speaker Rejects Today’s Attempt at a Meaningful Vote
There has been significant development in the Brexit process in the past week alone.
A UK-EU Brexit deal has been agreed, UK Parliament have attempted to ensure that UK Prime Minister Boris Johnson asks for a Brexit extension if necessary, and now the UK government’s attempt at a meaningful vote on its Brexit plan has been rejected.
The government had hoped to hold a meaningful vote this afternoon, amid reports that it had acquired the domestic support it needed.
However, UK House Speaker John Bercow rejected the attempted meaningful vote, on the grounds that it would be a repeat of Saturday’s parliamentary debate.
Still, amid expectation that the deal would soon see a meaningful vote of some sort, as well as rising hopes that the Brexit deadline will be delayed if there is no deal reached in time, the Pound remained fairly resilient.
According to Naeem Aslam from Think Markets:
‘The Sterling experienced a small movement towards the downside on the initial statement by the Speaker and the liquidity for the Sterling/Dollar wasn’t moved much.....
This confirmed that traders are patient and there is no panic in the market because the extension is widely expected.’
CAD Exchange Rates Steady as Results of Canada’s 2019 Elections Anticipated
While not a particularly politics-driven currency in recent years, the Canadian Dollar is a little jittery today as the Canadian public heads to the polls for the 2019 Federal Election.
After battling with months of various image scandals, Liberal Canadian Prime Minister Justin Trudeau was reportedly neck and neck with Conservative opponent Andrew Scheer in pre-election polling.
While pollsters called things too close to call, there appeared to be a real possibility that Trudeau could be the first first-term Prime Minister with a majority to lose a re-election for 84 years.
Overall the results are not expected to have a huge impact on Canada’s economic outlook for the time being however. According to Shaun Osborne, Chief Market Strategist at Scotiabank Toronto:
‘Historically, Federal elections do not appear to have had a significant impact on the underlying trend in the CAD and we suspect that 2019 may be little different,
After some noise around the vote, we think FX players will refocus attention on the Bank of Canada policy outlook, the Fed and international backdrop pretty quickly,’
GBP/CAD Exchange Rate Forecast: Brexit to Dominate Movement as Markets Digest Canadian Election
While the outcome of today’s Canadian election could be slightly influential if it surprises investors, it is unlikely to cause significant movement regardless of the outcome.
If the ruling Liberals are able to hold onto power but need to form a coalition to gain a majority, this could cause some fresh uncertainty for Canadian Dollar investors, but it is still likely to be
overshadowed by Brexit news.
The Pound is likely to drive GBP/CAD movement in the coming days depending on how the Brexit process unfolds.
With only 10 days until the current 31st of October Brexit deadline, analysts are hoping that an extension can be secured even if the Brexit deal is not able to pass through parliament.
Brexit passing would cause Sterling to rocket, while the process being delayed could instead lead to some Pound to Canadian Dollar exchange rate relief.
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TAGS: Pound Canadian Dollar Forecasts