Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Drops by -0.3% on Brexit Emergency Plans
The Pound (GBP) has made a moderate loss against the Canadian Dollar (CAD) today, dropping by -0.3% in the pairing.
This deterioration has been caused by the latest Brexit development, which has consisted of the government releasing some of its impact papers for a no-deal Brexit.
The documents detail the government’s plans in the event of the UK leaving the EU without a solid Brexit deal and Sterling’s devaluation today suggests that GBP traders are unimpressed.
The official government line is that a no-deal Brexit would be disruptive but manageable for the UK, although analysts argue that no deal is still the worst possible outcome.
Among others, National Farmers Union Scotland (NFUS) President Andrew McCornick has warned that:
‘Today’s announcement has not told farmers or crofters anything new and has only left us with the same questions as we had before.
‘The government need to start giving details of what life is going to be like on the other side of Brexit.
‘Although time is running out for negotiations to produce the best possible outcome, it is the union’s opinion that the Chequers agreement, which would uphold the principles of free and unfettered trade in agri-foods between the UK and EU, is far better than a ‘no-deal Brexit’ which would be hugely destabilising for the farming industry.
‘A ‘no deal’ Brexit would mean the UK becoming a third country overnight, bringing in hard borders and the WTO default being imposed. That runs completely contrary to our desire for trade to be as friction free as possible.’
Only 24 of a total 80 impact papers have been released today and the rest will reportedly come out before the end of September.
Unless the other documents provide more palatable suggestions for how to deal with a no-deal Brexit, it is entirely possible that today’s GBP/CAD exchange rate losses will be repeated several times over the coming weeks.
Canadian Dollar to Pound (CAD/GBP) Exchange Rate Rises on Higher Crude Oil Prices
The Canadian Dollar’s (CAD) advance against the Pound (GBP) today has been caused by the latest shift in crude oil prices – the cost of crude ticked higher earlier today.
Higher crude oil prices benefit Canada as they mean that exporters can get a better price when selling their commodity.
Although there are signs that the US Federal Reserve could raise interest rates as soon as September, this US Dollar-supporting news hasn’t been enough to trigger Canadian Dollar to Pound (CAD/GBP) exchange rate losses.
Another factor raising Canadian Dollar demand today has been speculation that there could be a rapid resolution to North America Free Trade Agreement (NAFTA) talks.
This trade deal was put back under the spotlight due to criticism from US President Donald Trump, but CA Foreign Affairs Minister Chrystia Freeland has said that she is ‘very encouraged’ that ongoing issues could be resolved in the near-term.
Pound to Canadian Dollar Exchange Rate Forecast: Will Analysis of Brexit Plans Extend GBP/CAD Losses?
The Pound (GBP) is at risk of making greater losses against the Canadian Dollar (CAD) before the weekend, although this isn’t a guaranteed development.
GBP traders will have plenty of time of read through the 24 Brexit impact papers released today and if there are any particularly concerning passages then demand for the Pound could drop.
Outside of individual GBP investors, UK business bodies and analysis companies could also weigh in on the no-deal documents and a negative assessment would risk GBP/CAD exchange rate losses.
Moving onto the week ahead, the first major Canadian data will come out on Thursday (30th August), covering reported GDP growth.
These readings could support the Canadian Dollar and trigger a CAD/GBP exchange rate rise, as two of three figures are predicted to show growth.
The monthly GDP reading for June is tipped to slow from 0.5% to 0.2%, but the base and annualised Q2 figures are both expected to show a faster pace of economic expansion.
Beyond this, next week’s only notable UK economic data will be Friday morning’s GfK consumer confidence reading for August.
This is expected to show a marginal improvement in the reading with a shift from -10 points to -9, although this would still mean that consumer pessimism outweighs optimism.
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