This report will address the factors that are likely to affect exchange rates today if you are buying abroad or making a currency transfer. The below table shows the difference in Canadian Dollars when buying £200,000.00 during the high and low points of the past week.
|Currency Pair||% Change||Difference on £200,000|
The Canadian Dollar has remained under pressure this week against the Pound following on from poor Retail Sales and Inflation figures released at the end of last week. Another crucial factor which is weighing heavily on the CAD is the uncertainty surrounding the renegotiation of the North American Free Trade Agreement (NAFTA). On Monday discussions continued in Montreal with ministers from Canada, Mexico and the US, however a resolution was not reached and another round of discussions will talk place around the end of February or early March, this time in Mexico City. Progress is being made but slowly, and the media are suggesting that these discussions could even last all year, potentially even into 2019.
Any form of uncertainty can spook the currency markets and can be extremely harmful for the currency in question, just as the uncertainty following the Referendum caused the Pound to plummet in value. If an agreement is not reached, or if the US pull out of the trade agreement as Donald Trump has previously threatened, this would likely cause the Canadian Dollar to plummet against all of its currency counterparts. Keeping in touch with your broker at this turbulent time can allow us to keep you up to speed with developments as they happen.
This afternoon at 1.30pm will see the release of Canadian GDP (Gross Domestic Product) figures. Although the expectation is that the economy will have grown by 0.4% in November compared to the previous month, this could demonstrate the beginnings of a slowdown for the Canadian economy. This figure would fall below the Bank of Canada’s requirement of 0.5%, needed in order to hit the growth forecast of 2.5% for quarter four. If these figures disappoint, I would expect Canadian Dollar weakness, potentially pushing GBP/CAD to the 1.76 highs seen just last week. It is also worth noting that this was the highest level reached since May 2017. Clients with a Canadian Dollar selling requirement may wish to consider trading before this announcement to limit themselves from any further potential losses.
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