GBP/CAD Updates 7-Month High Amid Sino-US Trade Tensions

GBP/CAD continues the bullish rally that started on November 7, updating the highest level since May of this year. Currently, one British pound buys 1.7179 Canadian dollars, up 0.22% as of 10:33 AM UTC.

The Loonie is dragged down by the ongoing uncertainty around the trade relationship between the US-China. The world’s two largest economies cannot reach consensus on the tariffs rollback and Hong Kong protests.

US President Donald Trump reiterated his plans to raise new tariffs on Chinese goods is negotiations fail. Elsewhere, the US senate is thinking about supporting pro-democracy protesters in Hong Kong. China reacted by condemning the US legislation, citing interference in internal affairs. The senate’s bill to back protesters might stagnate the progress towards the “phase one” trade deal.

Besides this, the CAD has been under pressure after Bank of Canada’s senior official Carolyn Wilkins gave a speech yesterday. She was hinting that the central bank was moving towards an interest rate cut. She said that Canada’s financial system was in a good position to face any challenge caused by the global slowdown and ongoing Sino-US trade tensions. Although the BOC might still cut the rates at some point.

In the UK, the pound is supported by the steady Brexit optimism. Yesterday, Prime Minister Boris Johnson, who represents the Conservative Party, had his first head-to-head debate with opposition leader Jeremy Corbyn, who rules the Labour Party. A YouGov opinion survey showed that Johnson had a modest win of 51%.

YouGov stated:

“With the Prime Minister clearly attempting to tie every part of the debate back to Brexit — even offering to leave a copy of his Brexit deal under Jeremy Corbyn’s Christmas tree — he will be pleased to find he is seen as having performed better on the topic of Brexit.”

The debate is part of a campaign for the early election scheduled for December 12. The national poll will be held at the request of the PM himself. He believes the popular vote would allow his party to consolidate its position in the Parliament and handle the UK’s withdrawal.

Later today, the pair might become volatile as Canada will release a package of inflation data.  

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