Pound Canadian Dollar Exchange Rate News: GBP/CAD Targets One-Week High

December 30, 2019 – Written by John Cameron

Pound (GBP) Buoyed but No-Deal Brexit Risks Loom

The Pound (GBP) is trending higher against the Canadian Dollar (CAD) and the majority of its other peers at the start of this week’s session.

There appears to be no fundamentals behind this rise, and it comes amid the lull between Christmas and New Year which traditionally leads to thin trading conditions and low liquidity.

The uptick in Sterling has likely been in some part helped by a lull in Brexit headlines as UK parliament is closed for the Christmas recess.

GBP exchange rates have struggled in the weeks since Boris Johnson’s stunning election victory as fears of a no-deal Brexit have been reignited by Johnson’s decision to legally block any extension to the Brexit transition period past December 2020.

This has effectively left the PM with a year in which to successfully navigate the complex task of negotiating the UK’s post-Brexit trade relationship with the EU, something which GBP investors fear may be difficult to achieve.

One prominent sceptic is new European Commission president, Ursula von der Leyen how suggested on Friday that she had serious concerns about the narrow time frame.

Speaking to French newspaper les Echos, Von Der Leyen warned:

‘It’s not only about negotiating a free trade deal but many other subjects, It seems to me that on both sides we must ask ourselves seriously if all these negotiations are feasible in such a short time.’

Von Der Leyen suggests the realities of negotiations may require the UK government to perform a U-turn in mid-2020 and review whether an extension may be needed.

Canadian Dollar (CAD) Lacks Direction in spite of Surging Oil Prices

At the same time, the Canadian Dollar (CAD) is stuck trading in a narrow range at the start of this week in spite of oil prices striking a three-month high.

WTI Crude prices climbed above $ 62 a barrel on Monday, striking their best levels since mid-September, amidst rising tensions in the Middle East.

This came in the wake of a series of US air strikes in Syria and Iraq, which stoked concerns of disruption to oil production in the area.

Oil products make up roughly 20% of Canada’s total exports so a bump in oil prices is generally seen as CAD positive.

However some analysts are speculating that crude prices could be undermined by some profit taking as we close out 2019, potentially limiting any upside in the Canadian Dollar at the start of the week.

Speaking to Reuters on Monday, Margaret Yang of CMC Markets suggested:

‘Oil prices have reached their highest level since the Saudi oilfield attack in mid-September. Traders are also cautious about profit-taking possibilities.’

GBP/CAD Exchange Rate Forecast: Gloomy PMI Figures to Weigh on Sterling?

Looking ahead, the Pound Canadian Dollar (GBP/CAD) exchange rate may come under pressure later in the week as the UK publishes its latest PMI figures.

First up will be the UK’s manufacturing PMI, with December’s final reading set to confirm growth in the UK’s factory sector slumped to a seven year low.

This will be followed by the construction PMI on Friday, with economists forecasting the construction sector will have suffered its eighth consecutive month of contraction in December.

Meanwhile, CAD investors are likely to be focused on a speech from Bank of Canada (BoC) Deputy Governor Carolyn Wilkins at the end of the week.

Traders will be looking for more clarification on the BoC’s policy plans for 2020, potentially leading to some weakness in the Canadian Dollar if Wilkins hints a rate cut could be on the table.

International Money Transfer? Ask our resident FX expert a money transfer question or try John’s new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Pound Canadian Dollar Forecasts