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GBP/CAD Falls as May’s Brexit Deal is Rejected for Third Time

Last week’s high: $1.7784

Last week’s low: $1.7451

 

Canadian Dollar Rises as Brexit Gloom Weighs on Pound

The Pound Canadian Dollar exchange rate fluctuated wildly last week as Brexit took several turns, with MPs rejecting all eight ‘indicative votes’ while Prime Minister Theresa May’s deal was split in two.

The first half of the session saw the Pound weaken after MPs continued to pile on pressure for Mrs May to resign. Doubts also rose over whether a third ‘meaningful vote’ would even go ahead, as House Speaker John Bercow urged for ‘substantial changes’ that were not forthcoming.

Tuesday, meanwhile, saw the Chair of the European Research Group (ERG), Jacob Rees-Mogg effectively admit he would back May’s deal, which saw some of the gloom around a third vote diminish, as the ERG generally holds sway in its success.

Wednesday, meanwhile, saw the export-reliant Canadian economy take a hit from the publication of the international merchandise trade figures for January, which slipped to CA$-4.25bn.

The second half of the week saw eight parliamentary ‘indicative votes’ with MPs voting down all of the options available. This then led to Theresa May dividing her deal in half for a vote on Friday.

The former Foreign Secretary, Boris Johnson, then announced his support – although the DUP remained resilient, saying it would vote against May’s deal.

The pairing closed the week with the Pound down against the ‘Loonie’ as May’s Brexit deal was rejected by a majority of 58. May described the outcome as ‘grave’, adding, ‘I fear we are reaching the limits of the process of this house.’

 

CAD Outlook: Canadian Manufacturing PMI Figures Could Provide Uplift for ‘Loonie’

Looking ahead to the week ahead, Brexit once again is to remain in the spotlight as the clock ticks ever close to the UK’s 12 April leaving date.

May has stated that she will press forward for an orderly deal, however Sterling traders will most likely be looking for signs of a possible extension of Article 50.

Any signs that the EU are unwilling to extend the Brexit process would see the Pound plummet as the UK would likely face a no-deal exit.

Canadian Dollar traders, meanwhile, will be looking ahead to Monday next week which will see the publication of the Canadian Markit Manufacturing PMI figures, which are expected to improve.

 

Key Events

01st April

08:30 UK Markit Manufacturing PMI (Mar)

13:30 Canadian Markit Manufacturing PMI (Mar)

02nd April

08:30 Markit Construction PMI (Mar)

03rd April

08:30 UK Markit Services PMI (Mar)

04th April

14:00 Canadian Ivey Purchasing Managers Index (Mar)

05th April

12:30 Canadian Unemployment Rate (Mar

12:30 Canadian Participation Rate (Mar)

12:30 Average Hourly Wages (YoY) (Mar)

12:30 Canadian Net Change in Employment (Mar)

 

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To keep up to date with the Canadian Dollar, visit the CAD blog in our Currency News section.

 

Alastair Archbold

Foreign Exchange Manager

aja@fcgworld.co.uk

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