Whilst the pound came under pressure over the weekend, its recent gains against the CAD up until then had been particularly impressive.
Sterling gained approximately four cents against the loonie in the past week and despite some conflicting reports over the weekend regarding whether a Brexit deal was close to being agreed, was still finding plenty of support above 1.70 against the CAD.
|Currency Pair||% Change in 1 month||Difference on £200,000|
To put these recent gains in perspective, any client who traded £100,000 to CAD today compared to the same point last week would have gained almost $3000 CAD more on their exchange. Regardless of the current market instability, this is still a sizeable return in a short period of time.
Whilst there will be some concern amongst investors that a Brexit deal has yet to be finalised, I still expect the pound to find plenty of support around 1.70 against the Loonie over the coming days.
The CAD did curb any further losses yesterday as investors' support for sterling cooled, but it has struggled to make any real inroads against the pound despite the recent announcement that a revised NAFTA deal with the US and Mexico had been agreed.
This agreement has been renamed the USMCA agreement, and despite Canada’s reluctance to put pen to paper over recent months (probably due to the fact that the revised terms were far less favourable than the previous agreement) the Canadian Government ultimately felt that without it, their economy would suffer considerably in the longer-term.
US President Donald Trump’s tactics of playing hardball over the matter seem to have paid off, even threatening at one point to pull out of the agreement altogether if the US didn’t get more from the arrangement.
The CAD has also struggled, like other commodity-based currencies, due to a slowdown in global trade. With investors' global risk appetite shrinking over recent months, due to concerns over Brexit and the escalating trade war between the US and China.