The Canadian Dollar to Pound Sterling (CAD/GBP) Exchange Rate strengthened on Tuesday as traders saw a huge corporate merger as a positive for the North American Economy.
The ‘Loonie’ also advanced against the US Dollar (USD).
A proposed merger between the USA’s Burger King and Canada’s Tim Horton’s thought to be worth around $11,4 billion and would create the world’s third largest fast food restaurant company was seen as positive for the Canadian Dollar as the foreign buyer will have to acquire the ‘Loonie’ to close the deal.
By buying Tim Hortens it gives Burger King access to the grocery sector by selling packaged coffees and a coffee brand that enjoys a cult following in North America, the company is also a major seller of doughnuts.
“By bringing together our two iconic companies under common ownership, we are creating a global (quick service restaurant) powerhouse,” said Alex Behring, executive chairman of Burger King and managing partner of 3G Capital, the majority owner of Burger King.
The deal will see the company headquarters relocate to Canada in a bid to take advantage of lower corporate taxes compared to those found in the US.
The Pound meanwhile was under pressure throughout Tuesday’s session after a report released early in the day by the Confederation of British Industry (CBI).
The report showed that service sector business growth in the UK slowed in the second quarter of the year and that the volume in growth was the slowest seen since last year.
“The slowing in the pace of growth and profits in the service sector reflects our view that momentum in the economy will ease in the second half of the year, but this doesn’t necessarily mean a gear change in the recovery. It’s encouraging that our service sector firms continue to feel upbeat, especially when looking ahead to the next quarter,” said Katja Hall, CBI deputy director-general.
Also weighing upon Sterling was a separate report, which showed that the number of mortgage approvals in the UK increased by 42,800 last month, a figure was less than the 44,200 increase forecast by economists.
The data adds to the picture that the UK economy is slowing.
Canadian Dollar to Pound Sterling Exchange Rate
With a lack of major market moving data releases for the Pound this week investors are looking ahead to Friday when Statistics Canada releases its June reading on Gross Domestic Product (GDP).
Economists are expecting a reading of 0.7% that would translate into an annualised growth figure of 2.6%.
The CAD/GBP exchange rate will be vulnerable to geopolitical events as the market is jittery ahead of a meeting between the leaders of Ukraine and Russia.
The widening conflict in Iraq against the Islamic State could also widen after the US said that it was launching reconnaissance flights over Syria.
Canadian Dollar (CAD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Canadian Dollar,
,Pound Sterling,0.5510 ,
Canadian Dollar,,US Dollar,0.9137 ,
Canadian Dollar,,Euro,0.6895 ,
Canadian Dollar,,Australian Dollar,0.9790,
Canadian Dollar,,New Zealand Dollar,1.0946 ,
US Dollar,,Canadian Dollar,1.0944 ,
Pound Sterling,,Canadian Dollar,1.8125 ,
Euro,,Canadian Dollar,1.4482 ,
Australian Dollar,,Canadian Dollar,1.0198 ,
New Zealand Dollar,,Canadian Dollar,0.9201 ,
[/table]
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