?Brexit? Debate Reaches Surreal New Heights as Farage, Geldof Engage Butt Boats

The Pound to Canadian Dollar exchange rate rallied this morning.

Rising 0.30% against the ‘Loonie’, Sterling gained the upper-hand as global oil prices slipped back below $50, placing extensive downward pressure on the Canadian Dollar.

Yesterday had been a surreal day for the Pound between a brutal leaked emergency budget from Chancellor George Osborne and a strange confrontation between Nigel Farage’s flotilla of 30 British fishing vessels and a pleasure-craft filled with ‘In’ supporters headed up by Bob Geldof.

Recent times have shown however that the UK’s currency has all but decoupled itself from domestic economic reports in the wake of a constant battering by ‘Brexit’ opinion polls. The results have varied from a ‘Remain’ lead, a neck-and-neck race and now a six-point ‘Leave’ advantage, causing the Pound to vary wildly as a result. The Pounds short-term volatility continues to soar to unprecedented levels.

The current Pound Canadian Dollar exchange rate (GBP/CAD) sits 0.25% above opening at 1.8370

Fear-Inducing Emergency ‘Brexit’ Budget Leaked by George Osborne

Yesterday George Osborne leaked a harrowing emergency budget that would be enacted in the event of a ‘Brexit’. The leak detailed a £30 Billion rift that would need to be filled by raising taxes and increasing public sector cuts.

A 2% rise on the basic income tax rate bringing it ever closer to that ¼ of your earnings mark, increased alcohol and petrol duty and 2% cuts to defence, health and education are all outlined and the suggested cuts are concerning. However, it may be of note that Osborne chose to consult the treasury while planning this new budget, instead of the Office for Budget Responsibility that he himself spearheaded in 2010.

Domestic ecostats printed well yesterday as the UK’s job market employed 55,000 new workers and also saw wage growth continuing to steadily rise at 2%.

The Pound remained fairly steady amongst the chaos that occurred yesterday thanks to impact-heavy polls practically decoupling the Pound from domestic data.

‘Loonie’ Struggles under Falling Global Oil Prices

With the already weak Canadian Economy still feeling the burn from the Alberta wildfires, news that oil prices have dropped globally has served to facilitate a further drop in the Canadian Dollar.

With the US Federal Reserve’s decision not to increase rates, US demand for the ‘Loonie’ has all-but dried up as the commodities market isn’t inspiring heaps of confidence thank to falling oil and copper ore prices.

Oil dipped to just below $50 a barrel, firmly within the proposed ‘reverse goldilocks’ zone’ as explained by Head of Commodities Research at Standard Chartered Paul Hornsell:

‘It's 'reverse Goldilocks' – it's not hot enough and it's not cold enough. If you're bearish, it's not low enough for the bears and it's not high enough for the bulls. Ergo, ($50) is the one number you don't stick at’

Being a heavily commodity-correlated currency, recent events have increased downward pressure on the Canadian Dollar.

Forecast Unclear Amidst Sparse Ecostats, Uncertain Market Sentiments

Analysts’ eyes will be eagerly awaiting this afternoon’s Bank of England announcement to see how it tempers sentiment within the market. The bank is not expected to change its benchmark rate in the face of the upcoming EU referendum. No impactful ecostats will be releasing from the UK.

Canadian CPI and core CPI is set to release tomorrow. The Canadian economy’s prime method of measuring inflation is expected to show a decrease across both core and non-core, month-on-month and year-on-year CPIs as Canada’s flagging economy struggles. If inflation continues to fall then investors may shy away from the ‘Loonie’ as the possibility of a Bank of Canada rate cut increases.