GBP/CAD Exchange Rate, Canadian Dollar Investors Brace for US Fed Rate Decision
The Pound Canadian Dollar (GBP/CAD) exchange rate held steady today, with the pairing currently trading around CA$ 1.740 after this afternoon’s release of Canada’s Industrial Capacity figure for the third-quarter fell below expectations at 81.7%.
The result was weaker-than-expected but as not ‘shocking’ after the economy slowed in the third quarter, according to Analysts at Action Economic.
However, Canadian Dollar (CAD) investors are remaining cautious ahead of today’s interest rate decision from the US Federal Reserve, which is expected to hold at 1.75%.
Any dovish comments from the Fed, however, could weaken confidence in the Canadian Dollar which is closely tied to America’s economic outlook.
‘Loonie’ investors are also paying close attention to US-China trade developments today, with Canada’s economy set to benefit from any signs of a trade deal being struck between the world’s two largest economies.
Kenny Polcari, a Senior Market Strategist at Slatestone Wealth commented that there may be an ‘eleventh-hour’ trade deal between the two countries, saying:
‘They’re going to come out and say ‘we’ve got a deal … we’re working on tweaking, fine-tuning it. But, to show good faith, we’re not going to impose these tariffs.’ And then the markets will rally.’
GBP/CAD Outlook Rangebound on UK Election Uncertainty
The Pound (GBP) failed to gain on the Canadian Dollar (CAD) after UK political uncertainty has dominated Sterling movement after last night’s release of the updated YouGov MRP poll.
The report suggested that the Conservative’s had narrowed their lead against the Labour Party to just a 28-seat majority, further heightening fears of a hung parliament just a day ahead of the general election.
Chris Curtis, YouGov’s Political Research Manager, also urged caution:
‘Our latest and final poll shows that a small Conservative majority is likely, with the Tories taking 22 more seats than in 2017 and Labour losing 31.
‘But the margins are extremely tight and small swings in a small number of seats, perhaps from tactical voting and a continuation of Labour’s recent upward trend, means we can’t currently rule out a hung parliament.’
GBP/CAD Outlook: UK General Election to Drive Pound Movement
The UK’s parliamentary elections will remain firmly in the spotlight tomorrow, with any signs of a hung parliament or a Labour victory likely weakening the Pound on heightened uncertainties around Brexit.
Markets generally prefer a Tory majority due to their promise to resolve Brexit my January 31st, so any signs of deviation from a Conservative majority leaves investors feeling jittery.
Canadian Dollar investors will be awaiting tomorrow’s speech by Stephen Poloz, the Governor of the Bank of Canada (BoC).
Any dovish commentary from the BoC could boost the GBP/CAD exchange rate.
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TAGS: Canadian Dollar Forecasts Pound Canadian Dollar Forecasts