Recent Canadian data has been a mixed bag. The economy created 66.8 thousand jobs in January landing significantly above the 6.5 thousand which boosted Canadian dollar value.
Manufacturing figures were not so impressive, these saw declines of 1.4% in November and 1.3% in December. The Canadian manufacturing sector has suffered as the global trade war has caused a drop in demand for Canadian exports.
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Oil is Canada’s primary export and as such fluctuations in oil price can cause a change in the value of the Canadian dollar. At present low oil prices are weighing on the economy and on the Canadian dollar. Recent statements from the Bank of Canada indicate that there will be no interest rate hike in March, but hikes later in the year will not be ruled out if justified by economic growth.
If we look at GBP/CAD more specifically the rates are largely being dictated by Brexit. May is currently having a great deal of trouble getting her deal through Parliament. The chances of a no deal scenario are slim and this has been one of her only forms of ammunition throughout talks. It will be extremely difficult for her to gain the concessions she is after in order to pass the deal through Parliament.
I think the pound will remain weak until we have some form of clarity surrounding Brexit. I think the likely outcomes are either an 11th hour deal or an extension both of these outcomes I believe would help the pound.
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