Monday’s trading session has seen the Pound remain in demand against the Canadian Dollar, following a slightly disappointing Canadian housing announcement.
In April, construction starts for houses rose by 214.1k, just down from the 217.5k forecast and much lower than the previous 252.3k figure.
(First published 13:21, May 8th, 2017)
The Pound to Canadian Dollar exchange rate has risen slightly today, but a notable rally has been prevented by the French Presidential election.
The vote was won by the pro-EU Emmanuel Macron, triggering a wave of optimism across a previously tense EU and Eurozone.
One nation’s gain may be another’s loss, however, as concerns have already been raised about what Macron’s victory means for Brexit talks.
The new President has been critical of Brexit in the past and based much of his campaign on his openly Europhile attitudes.
In his own words, Macron has said of Brexit;
‘I respect the British vote but the worst thing would be a sort of weak EU vis-a-vis the British. I don’t want a tailormade approach where the British have the best of two worlds. That will be too big an incentive for others to leave and kill the European idea, which is based on shared responsibilities’.
On the contentious issue of a UK-EU trade agreement, Macron has been unambiguous, stating ‘The best trade agreement for Britain…is called membership of the EU’.
If Macron sticks to his guns and aims to make Brexit extremely unappealing, the UK could be forced into ‘Hard Brexit’. This outcome would see the UK have a disadvantageous trade deal or none at all, along with other lost membership benefits.
Such an outcome implies high economic turbulence and possible fresh lows for the Pound to Canadian Dollar exchange rate.
On the other side of the pairing, the Canadian Dollar may rally in the near-term if trade deals are made with China.
The bulk of Canada’s exports go to the US and Mexico, as part of the North American Free Trade Agreement (NAFTA).
Under Donald Trump, however, the US could pull out of NAFTA or continue renegotiating it. These renegotiations took a turn for the worse in April, when the US imposed an average 20% tariff on Canadian softwood imports.
Canada has been quick to react, sending Trade Minister Francois-Philippe Champagne on a trip to China in a bid to secure a better trade deal.
If continued US aggression does lead to Canada committing to fresh trade deal with China, the Canadian Dollar could rally.
Recent Interbank GBP CAD Exchange Rates
At the time of writing, the Pound to Canadian Dollar (GBP CAD) exchange rate was trading up at 1.77 and the Canadian Dollar to Pound (CAD GBP) exchange rate was trading down at 0.56.
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