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GBP to CAD Exchange Rate Climb Away from Week Worst amid Canada’s Trade and Economic Jitters

November 6, 2019 - Written by Tim Boyer

The British Pound to Canadian Dollar (GBP/CAD) exchange rate has been trending lower this week, but the pair is up on yesterday’s levels as the Canadian Dollar is weakened by the latest market concerns over Canada’s trade and economy. Concerns that the Bank of Canada (BoC) could take a more dovish stance on monetary policy have been weighing on the ‘Loonie’, making it easier for Sterling to edge higher again despite a lack of solid demand for the British currency.

On top of this, GBP/CAD has sustained a good amount of last week’s impressive gains. GBP/CAD surged over two cents from 1.6751 to 1.6995.

While GBP/CAD has slipped further away from last Friday’s four month best of 1.7077, the pair’s losses this week haven’t been significant overall. At the time of writing, GBP/CAD is trending just around a third of a cent lower than the week’s opening levels, near the level of 1.6960.

GBP Exchange Rates See Steady Movement Ahead of Bank of England (BoE) Decision

The Pound’s weeks of highly volatile and sharp movements appear to be over for now, as this week has seen the British currency trending more steadily and narrowly.

Markets are holding ground on the Pound, eagerly awaiting the next major shifts in the political or economic outlooks before making any big moves on the British currency.

For now, markets are betting that a solid election win for Britain’s ruling Conservative Party will lead to a relatively soft Brexit, which is keeping Sterling buoyed.

With the Bank of England’s (BoE) November policy decision tomorrow, and Britain’s political parties actively campaigning for next month’s anticipated general election, the Pound is seeing steady movement today as well.

Analysts believe that the Pound’s outlook could weaken however, if election polls begin to show a closer race than hoped.

There are also concerns that the aftermath of a December general election leaves little time before the current Brexit date of 31st of January. According to Jane Foley, Senior Currency Strategist at Rabobank:

‘There is a lot of pressure to get a trade deal done in a very short period of time and Barnier is indicating that could be tough

So for Sterling there is the possibility that a lot of a good news that was built into the price in October could start to seep out,’

CAD Exchange Rates Pressured amid Trade and Bank of Canada (BoC) Uncertainties

While the Canadian Dollar is up against the Pound so far this week, this is largely due to hopes that the US and China are closing in on a preliminary trade deal that could be completed in the coming weeks.

As the Canadian Dollar is correlated to trade, this has supported Canadian Dollar strength.

However, other factors in trade and Canada’s economic outlook are limiting Canadian Dollar appeal, leaving it among the weaker of the major trade-correlated currencies this week.

Canada’s trade outlook may have been more damaged than expected by the trade war, as yesterday’s Canadian trade balance and exports results from September were weaker than forecast.

On top of Canadian trade jitters, the Canadian Dollar is being pressured by concerns that the Bank of Canada (BoC) could become even more dovish unless Canadian data shows more signs of recovery.

GBP/CAD Exchange Rate Forecast: Central Bank Speculation and Major Canadian Data in Focus

The Pound to Canadian Dollar exchange rate is currently edging higher, but will the pair continue to recover towards the end of the week?

With upcoming central bank news, as well as data that could inspire central bank bets, GBP/CAD could be influenced by bank bets in the coming sessions as well as the usual political and trade developments.

Tomorrow will see the Bank of England (BoE) hold its November policy decision. Though the bank is not expected to announce any changes to monetary policy, the tone the bank takes in regards to Britain’s political and Brexit outlooks could be highly influential.

If the BoE ramps up warnings about Britain’s economic activity, the Pound could come under fresh pressure. Polls showing a tighter election race would also limit Sterling’s potential for recovery.

The Canadian Dollar, on the other hand, will be influenced by Friday’s anticipated Canadian job market report.

If the data beats forecasts, Bank of Canada (BoC) interest rate cut bets could lighten and GBP/CAD could fall further. Weaker data would have the opposite effect though.

Trade developments, such as with the US-China trade war, could also influence the Pound to Canadian Dollar exchange rate.
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