The Pound has dropped against the Canadian Dollar recently, following the apparent lack of progress made in ongoing Brexit negotiations.
Pound Sterling Outlook: Future UK-ECJ Relationship could Devalue GBP
As Brexit talks continue, the Pound stands to decline against the Canadian Dollar on the outcome of plans to separate the UK from the European Court of Justice (ECJ).
Seen as a necessary measure for the UK to ‘take back control’, separating from the ECJ is considered a difficult if not impossible action for the UK government.
This is because under current UK plans, the ECJ may still have some undefined involvement in UK law after Brexit, as well as having to be involved with future UK-EU deals by default.
Among those weighing in on the issue has been Labour’s Shadow Brexit Secretary, Sir Kier Starmer. Starmer has warned that struggling to solve the ECJ issue may hinder the progress of Brexit talks, stating;
‘The prime minister’s ideological insistence that there can be no future role whatsoever for the ECJ or any similar court-like body risks preventing the deal Britain needs’.
Canadian Dollar could Slump if US Pulls out of NAFTA Deal
Looking to the future, the Canadian Dollar may be in for a sharp decline against the Pound if Donald Trump follows through on a throwaway remark made at a recent campaign rally.
Among other topics, Trump briefly touched on the progress of the renegotiation talks for the North American Free Trade Agreement (NAFTA), a deal which involves Canada, the US and Mexico.
Trump was initially aiming to secure a better deal for the US out of the talks, but has since stated that;
‘Personally, I don’t think we can make a deal. Because we have been so badly taken advantage of. They (Canada and Mexico) have made such great deals – both of the countries, but in particular Mexico – that I don’t think we can make a deal. So I think we’ll end up probably terminating NAFTA at some point.
I told you from the first day, we will renegotiate NAFTA or we will terminate NAFTA. I personally don’t think you can make a deal without termination but we’ll see what happens’.
If Trump does commit to this plan of action then the Canadian Dollar could fall sharply against the Pound.
This is because the viability of the trade deal without the US involved would be questionable, potentially leading to a large loss of trade income for Canada.
Recent Interbank GBP CAD Exchange Rates
At the time of writing, the Pound to Canadian Dollar (GBP CAD) exchange rate was trading at 1.6095 and the Canadian Dollar to Pound (CAD GBP) exchange rate was trading at 0.6209.
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