GBP/CAD Exchange Rate Rises on US-China Trade Uncertainty
The Pound Canadian Dollar (GBP/CAD) exchange rate rose by 0.3% today, with the pairing currently trading around CA$ 1.713 after Canada’s Retail Sales figure for October fell to a worse-than-expected -1.2%.
Statistics Canada said in its statement:
‘The decline was primarily attributable to lower sales at motor vehicle and parts dealers and at building material and garden equipment and supplies dealers. After removing the effects of price changes, retail sales in volume terms decreased 1.4%.’
The risk-sensitive Canadian Dollar (CAD) also continued to fall against the Pound (GBP) as concerns begin to creep back in over US-China trade negotiations, with complications arising over Washington’s hard stance on technology driving a wedge between the two superpowers.
Shaun Roache, Chief Economist at S&P Global Ratings, was downbeat in his response, however, commenting:
‘It’s this other aspect of the relationship, that’s more to do with technology, non-tariff measures where it’s much more complicated. The risks of escalation is much higher and actually it’s where we think the long term impact is much greater.’
GBP/CAD Exchange Rate Rises as UK GDP is Revised Upwards in Third-Quarter
The Pound (GBP) gained ground on the Canadian Dollar (CAD) today after the UK growth figure for the third-quarter was unexpectedly revised upwards to 0.4%, doubly confirming that the UK had avoided a recession this year.
Andrew Wishart, an Economist at Capital Economics recommended caution, however, saying:
‘The festive cheer will probably be short-lived seeing as [the upgrade] was driven by a larger boost to net trade than in the previous figures which we know has already started to unwind. The underlying picture is still that there is very little momentum in the economy.’
Brexit developments remain in focus, however, with Parliament set to pass Prime Minister Boris Johnson’s newly-amended Withdrawal Agreement Bill, which includes a ban against a ‘transition period’ beyond late 2020.
As a result, the GBP/CAD exchange rate has been compromised by market concerns over the possibility of a cliff-edge Brexit next year, with fears rising that the UK could face a no-deal with the European Union.
GBP/CAD Outlook: Canadian Growth Figure and Brexit in Focus
Canadian Dollar (CAD) investors will be looking ahead to Monday’s Canadian Gross Domestic Product figure for October, which is expected to improve by 0.1%, potentially providing some uplift for the CAD/GBP exchange rate next week.
The GBP/CAD exchange rate will, however, continue to be driven by Brexit developments next week, with any further signs of a possible cliff-edge Brexit scenario in the year ahead providing Pound-negative.
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TAGS: Canadian Dollar Forecasts Pound Canadian Dollar Forecasts