GBP CAD Exchange Rate Recovers after Election Concerns

The GBP CAD exchange rate mounted a recovery by mid-morning today as recent polls suggested that the Conservatives still enjoyed a healthy lead over Labour.

The Pound Canadian Dollar (GBP CAD) exchange rate initially tumbled this morning following the recent terror attack in London, with investors shying away from Sterling as they feared the impact it would have on the General election, especially with Theresa May facing increasing pressure over police cuts.

However the Pound began to trend higher later in the morning, as the latest polling data was released. While the YouGov poll, which has been the source of much of the recent market uncertainty continued to suggest that Theresa May will lose her majority, investors instead focused on the latest Guardian/ISM poll which gave the Conservatives an 11 point lead.

Markets are particularly sensitive to this election as the UK gears up to start Brexit negotiations later in the month, with observers predicting that a smaller majority for the Tories or even a possible hung parliament would hinder the Brexit process and weaken the government’s position in negotiations.

The Canadian Dollar was able to stem its losses today thanks to a sudden and sharp rise in oil prices following the decision by a number of Arab states to cut ties with Qatar.

A number of Gulf States including Saudi Arabia announced they were cutting diplomatic ties with Doha today as they accuses the Qatar government of supporting terrorism and destabilising the region.

The Associated Press said;

‘Saudi Arabia said it took the decision to cut diplomatic ties due to Qatar’s “embrace of various terrorist and sectarian groups aimed at destabilizing the region” including the Muslim Brotherhood, al-Qaida, the Islamic State group and groups supported by Iran in the kingdom’s restive eastern province of Qatif.’

The move caused a notable upturn in oil prices thanks to Qatar’s position as the leading supplier of liquefied natural gas, with analysts believing that the loss of access to many of its neighbours would likely disrupt production.

However crude-correlated ‘Loonie’ found its gains tapered somewhat by the afternoon as prices slipped once again, with investors fearing that the moves against Qatar could threaten the OPEC agreement to cut oil production.

The GBP CAD exchange rate is likely to be met by further volatility ahead of the UK general election on Thursday, with the race being a lot tighter than analysts had first predicted and the Brexit negotiations hanging in the balance, markets are likely to become increasingly jittery as the week goes on.

Meanwhile the Canadian Dollar may soften on Tuesday with the release of the Ivey PMI, with the business indicator expected to show a slight drop from 62.3 to 62.0.

At the time of writing the GBP CAD exchange rate was trending around 1.7436 and the CAD GBP exchange rate was trending around 0.5730.