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Pound Nears 19-Month High Versus Loonie Dollar, as NAFTA Doubts Grow

Market CommentaryPound Nears 19-Month High Versus Loonie Dollar, as NAFTA Doubts Grow
The pound to Canadian dollar interbank exchange rate has hit 1.7770 today, very near its highest since June 23rd 2016, as doubts are growing over the NAFTA renegotiation talks. Image credit: Paige Foster.
The pound to Canadian dollar interbank exchange rate has hit 1.7770 today, very near its highest since June 23rd 2016, as doubts are growing over the NAFTA renegotiation talks. Image credit: Paige Foster.

by Peter Lavelle

Welcome to Pure FX’s latest update of the pound to Canadian dollar interbank exchange rate.

This tells you when it’s a favourable time to exchange pounds to Canadian dollars, for your money transfer!

Sterling shoots up versus the loonie! The pound to Canadian dollar interbank exchange rate has hit 1.7770 today, very close to its highest in 19 months, or since June 23rd 2016.

The pound has risen against the Canadian dollar, because financial markets doubt whether Canada, Mexico and the USA will successfully renegotiate the NAFTA free trade deal.

The 7th round of the North American Free Trade Agreement (NAFTA) renegotiations began on Sunday, yet the 3 countries remain far from agreement, thus weakening the loonie dollar.

In particular, US President Donald Trump and Mexico’s President Enrique Peña Nieto have cancelled a meeting, over Mr. Trump’s plans to build a US/Mexico border wall, so hurting the CA dollar.

Also, Mr. Trump has accused Canada of “outsmarting [US] politicians for many years”, being “very rough”, and has “taken advantage” of America, thereby weighing on the Canadian dollar too.

The CA dollar has lost out, because Canada sends close to 75% of its exports to the USA. So if there’s no successful NAFTA renegotiation, Canada’s economic growth may slow!

Pound rises, as markets confident of Brexit transition deal

In addition, the pound has also neared this 19-month high versus the Canadian dollar, because financial markets feel confident that the UK and the EU will agree a Brexit transition deal.

Sterling has strengthened, as markets are upbeat about Brexit, even though the EU will release its Brexit transition document today, in which the EU will highlight areas of divergence with the UK.

In particular, the pound has jumped, even though the EU looks set to skim past the UK’s call for the Brexit transition to extend further, beyond the EU’s proposed deadline of the end of 2020.

Furthermore, sterling has risen, although the EU’s chief Brexit negotiator Michel Barnier said on Tuesday that “in light of these divergences, we haven’t achieved the transition.”

The pound has climbed, because financial markets are optimistic that the UK and the EU will resolve these differences, and agree a Brexit transition deal by the deadline of the end of March.

With all this in mind, the pound to Canadian dollar interbank exchange rate has neared this 19-month high today, and could rise further!

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Please bear in mind, this article is Pure FX’s opinion only and does not constitute advice. Moreover, the exchange rates referred to in this article are the interbank rates, which are the rates at which banks and financial institutions buy and sell currency to each other. Therefore these exchange rates cannot be accessed by individuals or SMEs, and are not the same rates that Pure FX can offer. To get a free exchange rate quote, call us on +44 (0) 1494 671800, or email peter.lavelle@purefx.co.uk.

References

1. Charlotte Ryan, “Pound Traders May Shrug Off Adverse Brexit Headlines This Week”, February 28th 2018, Bloomberg.com, https://www.bloomberg.com/news/articles/2018-02-28/pound-traders-may-shrug-off-adverse-brexit-headlines-this-week
2. Fergal Smith, “Canadian dollar slides as NAFTA talks weigh”, February 26th 2018, TheGlobeAndMail.com, https://www.theglobeandmail.com/globe-investor/inside-the-market/market-updates/canadian-dollar-dips-as-oil-falls-investors-weigh-nafta-talks/article38110281/
3. Santiago Pérez and Peter Nicholas, “Mexico, U.S. Cancel Meeting After Trump Refuses to Avoid Border-Wall Talk”, February 25th 2018, WSJ.com, https://www.wsj.com/articles/mexico-cancels-meeting-after-trump-refuses-to-avoid-border-wall-talk-1519532663
4. Tim Ross and Emma Ross-Thomas, “U.K.’s May Is Ready to Fight With EU Over Draft Brexit Deal, Official Says”, February 28th 2018, Bloomberg.com, https://www.bloomberg.com/news/articles/2018-02-28/u-k-s-may-said-to-be-ready-for-fight-eu-over-draft-brexit-deal

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