The pound to Canadian dollar rate held near CA$1.8827 on Wednesday as a stalled USMCA trade review kept the Loonie subdued and Sterling traders waited on Bank of England Governor Andrew Bailey. Attention now turns to Westminster politics and a sliding oil price, either of which could set the pair’s next move.
The pound to Canadian dollar exchange rate traded in a narrow range at CA$1.8827 on Wednesday, little changed on the day, as neither currency found a clear catalyst. The Canadian dollar stayed on the back foot while the pound marked time ahead of central bank commentary.
USMCA review leaves the Loonie exposed
The Canadian dollar struggled for support as renewed uncertainty built around the future of the US–Mexico–Canada Agreement. Representatives of all three nations were set to meet on Wednesday for a review of the pact, but reports suggest the negotiations are likely to be extended rather than concluded on schedule.
That prospect unsettled Canadian dollar investors given the country’s heavy reliance on exports to the US. Prolonged ambiguity over future trading arrangements risks discouraging business investment across manufacturing, automotive production and energy, sectors deeply integrated with US supply chains.
Sterling waits on Bailey at Sintra
The pound treaded water at the start of Wednesday’s European session ahead of scheduled remarks by Bank of England Governor Andrew Bailey. He was to speak on a panel at the European Central Bank’s Sintra Forum alongside ECB President Christine Lagarde, Federal Reserve Chair Kevin Warsh and Bank of Canada Governor Tiff Macklem.
Investors expected Bailey to strike a more cautious tone than his peers, with Sterling stumbling amid speculation that the BoE may be the only major central bank not to tighten monetary policy this year.
What could move the pair next
Looking to the second half of the week, the pair may stay muted as a lull in data turns attention back to Westminster. With Andy Burnham looking likely to become the next Prime Minister, investors are speculating over his pick for Chancellor and how that might shape fiscal policy, remaining most wary of Ed Miliband, who analysts suggest would be more willing to oversee an increase in borrowing.
The Loonie, meanwhile, may take its cue from a softening oil market. Brent crude slipped 1.1% towards $70.00 a barrel, a third consecutive session of losses that could keep demand for the commodity-sensitive currency in check.
Sources: Exchange Rates UK, IG
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