August 14, 2020 - Written by John Cameron
STORY LINK Pound to Canadian Dollar (GBP/CAD) Exchange Rate Rises as Post-Brexit Trade Deal Hopes Return
GBP/CAD Exchange Rate Edges Higher as Hopes for a September Post-Brexit Deal Grow
The Pound to Canadian Dollar (GBP/CAD) exchange rate rose by 0.5% today, with the pairing currently trading around CA$1.73.
Sterling edged higher today on hopes that the UK could secure a post-Brexit trade deal with the European Union. This follows comments from David Frost, the UK’s Chief Negotiator, to the effect that the UK could secure a deal as early as next month.
Mr Frost commented:
‘Our assessment is that agreement can be reached in September and we will work to achieve this if we can. As we keep saying, we are not looking for a special or unique agreement. We want a deal with, at its core, an FTA like those the EU has agreed with other friendly countries, like Canada.’
However, following Downing Street’s announcement that France has been added to the Covid-19 quarantine list, growing fears for UK travel firms have escalate. Consequently, GBP investors are becoming increasingly concerned for the British economy’s recovery in the months ahead.
Canadian Dollar (CAD) Sinks Despite Upsurge in Canadian Manufacturing Sales
The Canadian Dollar (CAD) failed to benefit from today’s release of the Canadian manufacturing sales figure for June, which rose from 11.6% to 20.7%.
Statistics Canada said in its statement:
‘Many factories operated at a much higher capacity in June, with the capacity utilization rate (not seasonally adjusted) for the total manufacturing sector increasing 10.9 percentage points to 73.3%.’
‘Still, the capacity utilization rate remained 8.0 percentage points below the June 2019 level (81.3%).’
Instead, the Canadian Dollar (CAD) has suffered as markets brace for impact as US-Iran tensions continue to escalate. Consequently, confidence in the oil sensitive ‘Loonie’ has slipped today, dragging down the CAD/GBP exchange rate.
A recent IEA report also projected a dismal forecast for oil:
‘For road transport fuels, demand in the first half of 2020 was slightly stronger than anticipated, but for the second half we remain cautious and the upsurge in Covid-19 cases has seen us downgrade our estimates, mainly for gasoline.’
GBP/CAD Outlook: Could Hopes of a Post-Brexit Trade Deal Buoy Sterling Next Week?
Pound (GBP) traders will be looking ahead to Sunday’s release of the UK Rightmove house price index for August. Any improvement could further buoy the GBP/CAD exchange rate.
Meanwhile, Canadian Dollar (CAD) investors will continue to eye global economic developments. Any escalation in US-China or US-Iran tensions would drag down market confidence in the risk-sensitive ‘Loonie’.
The GBP/CAD exchange rate will also continue to be driven by Brexit developments next week. As a result, we could see Sterling climb higher on growing hopes on a September post-Brexit trade deal.
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TAGS: Pound Canadian Dollar Forecasts