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GBP/CAD Rises after Trudeau Trouble and Shock Canadian GDP Figures

Last week’s high: $1.7546

Last week’s low: $1.7130

 

Canadian Dollar Struggles as Justin Trudeau Faces Political Scandal

The Pound Canadian Dollar exchange rate gained this week on Brexit optimism following Prime Minister Theresa May’s concessions on providing MPs with powers to extend Article 50.

The first half of the session was bolstered by May’s announcement that she would delay the Brexit vote until 12 March, which was followed by Labour leader, Jeremy Corbyn, saying he would push forward to support a second-referendum.

The Canadian Dollar, meanwhile, struggled on Wednesday following the release of Canadian year-on-year CPI figures for January, which decreased below expectation to 1.4%.

The Pound further strengthened on Wednesday following MP Yvette Cooper’s amendment, which effectively allows an extension of the Brexit process if May’s deal fails to secure parliamentary approval, gained overwhelming support in the Commons.

Sterling sentiment began to flag towards the second half of the week as the former Brexit Secretary, Dominic Raab, criticised the EU’s dealing with the Northern Irish backstop and stepped down his support of May’s deal.

Friday saw the Pound begin to weaken following weak UK manufacturing PMI figures for February, which fell to 52.

The pairing closed the week with the Pound gaining on the Canadian Dolllar as political controversy surrounding Canadian Prime Minister Justin Trudeau.

This came following allegations against his former attorney general, Jody-Wilson Raybould, who prevented the prosecution of SNC-Lavalin, which was involved in bribery.

Fears that this could cost Trudeau’s career ahead of this year’s election, this began to severely weaken the ‘Loonie’. Friday also saw Canada’s GDP figures for December fall by -0.1%.

 

CAD Outlook: Canadian Dollar Could Rise on Bullish BoC Rate Statement

Looking ahead, Brexit is once again to remain in the spotlight, and following recent developments, any sign of increasing support for Theresa May’s Brexit deal could prove Pound-positive ahead of the important vote on 12 March.

Any signs of a second-referendum or a possible removal of a no-deal could also see the Pound once again soar, mirroring the previous week’s Brexit optimism.

Wednesday next week will see the release of the Bank of Canada’s interest rate decision, and with any bullish comments during the rate statement, this could see the ‘Loonie’ fall further.

Meanwhile, the focus for many GBP investors this week will be the speech by the Bank of England’s Governor, Mark Carney, on Tuesday, and with any dovish comments about the UK economy ahead of the imminent Brexit vote, this could see GBP/CAD fall.

 

Key Events

4th March

09:30 UK Markit Construction PMI (Feb)

5th March

00:01 UK BRC Like-For-Like Retail Sales (YoY) (Feb)

09:30 UK Markit Services PMI (Feb)

15:35 UK BoE’s Governor Carney speech

6th March

15:00 Canadian BoC Rate Statement

15:00 Canadian BoC Interest Rate Decision

15:00 Canadian Ivey Purchasing Managers Index (Feb)

7th March

08:30 Halifax House Prices (MoM) (Feb)

8th March

09:30 UK Industrial Production (MoM) (Jan)

13:30 Canadian Participation Rate (Feb)

13:30 Canadian Average Hourly Wages (YoY) (Feb)

13:30 Canadian Unemployment Rate (Feb)

 

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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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