During a busy week for UK politics, the Pound has jumped by 0.4% against the Canadian Dollar.
The latest GBP CAD exchange rate rise comes after comments from Bank of England (BoE) Governor Mark Carney, who was speaking in Portugal.
Pound Turbulence Predicted if Northern Ireland Deadline Passes
The Pound could tumble against the Canadian Dollar in the near-term, if talks in Northern Ireland fail to bear fruit. Having finally agreed to an informal union with the Conservative Party, the Democratic Unionist Party (DUP) now faces a struggle at home.
After events at the start of 2017 saw the Northern Irish Assembly collapse, the country has essentially been without a devolved government for around six months.
Talks are currently ongoing between the DUP and Sinn Fein, their staunch political rivals. The two parties have an extremely tight deadline to meet, coming on June 29th at 4pm.
The basics of the issue are that the two parties need to agree to share power before the deadline, or they may be ruled by the government from London.
Given how fierce the desire for independence is in Northern Ireland, this outcome could prove highly disagreeable to Sinn Fein and the DUP.
Having agreed to support the Conservatives for £1bn, the DUP may find itself in the uncomfortable position of having to accept Westminster’s decisions on funding across the devolved administration.
Broadly speaking, the Pound could crash if a deal is not agreed, as it will mean more instability and possibly fading power from the DUP, something the Conservatives can ill afford.
Canadian Dollar Outlook: July Interest Rate Hike could send CAD Soaring
The next major Canadian Dollar-influencing event will be July’s Bank of Canada (BOC) interest rate decision.
Following recent remarks by BOC Governor Stephen Poloz, the BOC could be on track to raise Canadian interest rates.
With some estimating a 60% chance of a rate hike in July, such an outcome could boost the Canadian Dollar against the Pound.
This rise in hike expectations came after Poloz stated in a CNBC interview that;
‘[Interest] rates are of course extraordinarily low. It does look as though [previous rate] cuts have done their job. But we’re just approaching a new interest rate decision so I don’t want to prejudge. But certainly we need to be at least considering that whole situation now that the excess capacity is being used up steadily’.
Recent Interbank GBP CAD Exchange Rates
At the time of writing, the Pound to Canadian Dollar (GBP CAD) exchange rate was trading at 1.6968 and the Canadian Dollar to Pound (CAD GBP) exchange rate was trading at 0.5888.
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