Pound Canadian Dollar (GBP/CAD) Exchange Rate Forecast: UK House Price Rise Bodes Well
The outlook for the Pound Canadian Dollar (GBP/CAD) grew increasingly positive on Monday as markets responded to news that UK house prices saw a surprising rise in March, relieving concerns for some that Brexit could be resulting in a downward shift in prices.
The Halifax house price index climbed by 1.5% in March, up from February’s increase of only 0.5%.
This marked the sharpest rise since August last year, with the bank asserting that there are ‘no signs that the acute shortage of stock of homes available for sale is easing’.
The limited supply continues to keep upward pressure on prices – great news for hawkish members of the Monetary Policy Committee (MPC) who had been concerned that a possible Brexit-induced housing slump might leave the UK economy too vulnerable for a round of rate hikes.
Beyond this rise the general market sentiment is that the Bank of England (BoE) will indeed be moving for a rate hike in May, with last month’s rate decision revealing a large push within the MPC to raise rates now, or risk having to raise them higher and faster down the line.
Sterling traded higher as a result, unperturbed by last week’s run of disappointing private sector production stats.
NAFTA Trade Deal in Focus – What can we Expect from the Lima Summit for CAD Exchange Rates?
Negotiations to rework the North American Free Trade Agreement (NAFTA) have not sufficiently progressed for the US, Canada and Mexico to announce a deal at this month’s Summit of the Americas in Lima, according to reports.
Whilst progress has occurred (enough to warrant some positive statements from US President Donald Trump) two Ministers involved in the talks have claimed that there is still a great deal of work to do before an unveiling of the agreement can occur, thus making an announcement of completion at the 13-14 summit unlikely.
Speaking to Reuters, the source did claim that a deal could be possible by the end of April or early May, however, an outlook consistent with comments from the US President, who stated that he expects something ‘fairly soon’.
This idea that a renewed NAFTA deal won’t be achieved in time for Lima hurt demand for the Canadian Dollar on Monday, giving GBP/CAD a notable boost.
US/China Trade Negotiation Fears Liable to Affect GBP and CAD Exchange Rates
The Pound Canadian Dollar (GBP/CAD) exchange rate will likely remain under the influence of US/China trade negotiations, with any evidence of escalation from either side liable to spook investors.
News on this front has largely see-sawed, with President Trump continuing to attack China’s unfair trade practices (notably their US intellectual property theft and high barriers) one second and reinforcing his friendship with Chinese President Xi Jinping the next.
Nonetheless, unless China comes to the table and illustrates a willingness to lower its trade barriers then the US could be forced to proceed with their proposed tariffs – an eventuality that could give the GBP/CAD exchange rate a shot in the arm.
Comments are closed.