GBP/CAD has slightly decreased in early trading on Monday, but the price is volatile and might close the session in green. One British pound buys 1.6993 Canadian dollars, down 0.05% as of 10.24 AM UTC.
The pair rallied from October 29 till the last day of the month, increasing from 1.6726 to 1.7084 during this period. The British pound got stronger after the opposition Liberal Party finally supported Prime Minister Boris Johnson’s bid for an early election on December 12. Meanwhile, the Canadian dollar has been under pressure after the Bank of Canada turned to a more dovish stance.
The GBP/CAD rally ended when markets realized that the US and China were close to an interim trade deal. The potential agreement between the world’s two biggest economies unleashed investors’ appetite for riskier assets, including stock and commodities.
CAD Driven by Oil Price Gains
Oil prices have surged since last Friday on increased hopes that the US-China trade conflict will calm down. This, in turn, has supported the Canadian dollar, as the Canadian economy is heavily relying on oil exports.
On Monday, oil prices have edged up, with Brent gaining over 1% and WTI adding 0.94%. Last Friday, Brent was up 2.42% while WTI surged 3.42%.
China said Xi Jinping and Donald Trump have been in touch through various means, though it didn’t clarify on when and where the two presidents will meet to sign the deal.
PVM analysts said in a note to investors:
“For all of Friday’s feel-good factor, there is no guarantee that they will put pen to paper before the end of the year. This could be problematic given that U.S. tariffs planned for Dec. 15 remain on the table.”
Pound Under Pressure Amid Weak UK Construction Data
The UK construction activity slipped for the sixth straight month in October, showing one of the worst performances since the 2009 financial crisis. The construction market was hit by the Brexit uncertainty and a general economic slowdown.
The construction purchasing managers’ index (PMI) rose to 44.2 last month from 43.3 in September, in line with analysts’ forecasts. Any figure below 50 points suggests contraction.