The lowest point the Sterling to Canadian Dollar exchange rate has hit this year is 1.5610, and with the pair currently hovering just above the 1.60 mark we’re not far from seeing those levels tested again. There does appear to be a bias to the downside as the UK’s Brexit appears to be making the headlines on a daily basis, and almost always for the wrong reasons.
Within the past week 2 prominent European figures have issued their options on how the Brexit should go ahead, and both suggested separations along the ‘Hard Brexit Lines’, which is a Sterling negative viewpoint.
French PM Francois Hollande doesn’t want the EU’s free movement of people to be put at risk so it’s looking unlikely that Britain will be allowed any exceptions. Donald Tusk was a bit more direct in his comments when he announced that there will be a ‘Hard Brexit or no Brexit’.
Comments along these lines are Sterling negative and haven’t helped the Pound, a currency which has been under pressure ever since UK Prime Minister, Theresa May announced that the initial invocation of Article 50 will occur in March of next year, once again dampening hopes of a long, drawn out and prolonged period of negotiations for the UK.
It’s dampening sentiment towards GBP, coupled with a boost to the Canadian Dollar as commodities go from strength to strength and oil hitting a 52 week high, that suggests to me that the GBP/CAD pair will dip below their current 52 week low before the end of the year.