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GBP to CAD Exchange Rate at New 2 and a Half Month Best on Brexit and Coronavirus News

November 18, 2020 - Written by Tim Boyer

A combination of Brexit hopes and market uncertainty is thrusting the British Pound to Canadian Dollar (GBP/CAD) exchange rate higher today. Sterling’s outlook is resilient for now with Brexit speculation and hopes taking focus, and weaker oil prices and US economic concerns are both weighing on the Canadian Dollar, which means the pair may find it easier to hold its ground in the coming sessions as well.

Following last week’s dip then strong rebound, from the level of 1.7181 to 1.7329, GBP/CAD is seeing fairly similar movement this week so far.

GBP/CAD slipped at the beginning of the week after markets opened, but the pair is already rebounding. At the time of writing on Wednesday afternoon, GBP/CAD trends near a high of 1.7388. This is the highest level for GBP/CAD in over two and a half months, since the beginning of September.

GBP Exchange Rates Buoyed as Brexit Hopes Persist

The Pound has been climbing this week, as markets still widely expect some kind of Brexit deal to be reached soon.

UK and EU officials continue to express optimism around the likelihood of a Brexit deal being reached soon. Speculation is rising that a Brexit deal could be presented as soon as next week.

This speculation and optimism is keeping the Pound trending with an upside bias in recent sessions, even as market anxiety over the coronavirus pandemic and lockdown persist as well.

According to Charalambos Pissouros, Senior Market Analyst at JFD Group:

‘In case we get more optimistic headlines regarding a deal, and conditional upon risk-on returning into the markets, the Pound is likely to perform better against the safe havens, the likes of the US Dollar, the Japanese Yen, and the Swiss Franc’

On top of Brexit optimism, the Pound also found a little support from today’s stronger than expected UK inflation rate report.

Still, the Pound’s appeal is limited overall. Analysts express concern that UK inflation could be set to slow in the coming months amid the coronavirus pandemic. A fresh report from economic thinktank NIESR said:

‘The imposition of a three-tier lockdown system on the 12th of October to stem the rise in Covid-19 infections likely introduced a greater level of uncertainty for consumers.

Households now face the prospect of deteriorating personal finances in the face of weaker economic growth and delayed recovery prospects for the UK economy.’

CAD Exchange Rates Unappealing as Global Coronavirus Gloom Weighs on Winter Outlook

The Canadian Dollar has been weaker today. While the Canadian currency did see stronger support on market recovery hopes thanks to this week’s coronavirus vaccine news, much like last week the vaccine optimism only had limited impact on markets.

Any coronavirus vaccines are still likely to be months out. This means that major economies are in for a rough winter period, in which the pandemic and lockdowns could continue to damage lives and economies.

Due to global coronavirus jitters, the Canadian Dollar is under pressure today.

Coronavirus fears are especially bearish for the Canadian Dollar, as they are causing weakness in the US Dollar (USD) and prices of oil.

The Canadian Dollar is often correlated to oil, as the commodity is Canada’s biggest export. CAD also often sees a correlation with the US Dollar’s strength due to Canada and the US having close economic relations.

Today’s higher than expected Canadian inflation rate results had little impact on Canadian Dollar movement.

GBP/CAD Exchange Rate Forecast: Brexit Optimism Could Keep Pair near Best Levels

The Pound to Canadian Dollar exchange rate could actually remain near its best levels in over two months, as market optimism over the Brexit process is likely to keep Sterling supported for now.

Hopes and speculation for a UK-EU Brexit deal of some kind are likely to persist unless there is a sudden dovish shift from officials. As a result, there is a decent chance that the Pound could remain resilient for now.

A dovish shift or no-deal Brexit fears could of course knock the Pound however.

The Pound could also weaken if upcoming UK retail sales data, due Friday, is highly disappointing. If Pound investors become more anxious about Britain’s economy amid coronavirus lockdown again, the Pound will struggle to hold recent highs.

The Canadian Dollar could recover in the coming sessions too, which may also pressure GBP/CAD.

If oil prices or the US Dollar strengthen again on coronavirus hopes, these could boost the Canadian Dollar as well.

Upcoming Canadian employment change data from ADP, as well as retail sales stats on Friday, could influence Canada’s own coronavirus outlook and the Pound to Canadian Dollar exchange rate as well.
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