GBP/CAD doesn’t deviate from the ascending trend that started on November 7. The pair is trading at 1.7224, up 0.19% as of 10:33 AM UTC, updating the highest level since May of this year. The price seemed to break the uptrend’s support level on Tuesday and yesterday, but it bounced back immediately and followed the bullish path.
The Loonie has been under pressure as the US Congress passed two bills aimed to support pro-democracy protesters in Hong Kong. The move might annoy China amid the trade talks that can potentially lead to the “phase one” deal. Investors’ worries affected the national currencies of trade-reliant economies like Canada. However, just recently, Chinese senior officials told media that Beijing would strive to reach consensus with the US no matter what.
Gao Feng, a spokesman at China’s commerce ministry said:
“This is in line with the interests of both China and the United States, and of the world.”
Nevertheless, the markets haven’t managed yet to react to this positive signal.
Canada’s Inflation Unchanged
Yesterday, Canada released its inflation data, according to which the annual rate of the consumer price index (CPI) was unchanged last month at 1.9%, in line with analysts’ expectations. This is the third month in a row when inflation shows little change.
The Statistics Canada said hat prices for goods rose 1.3% compared to October 2018, while prices for services increased by 2.2%.
Thus, Canada’s inflation moves in line with the central bank’s target. Last month, the Bank of Canada (BoC) left the interest rate unchanged, being the only major central bank to avoid aggressive easing measures, unlike the US Fed and the European Central Bank. However, the meeting minutes showed that the BoC was ready for a possible cut next year amid increased pressure from a cheaper USD.
All in all, the Canadian economy looks stable. Simon Harvey, forex market analysts at Monex, said that we shouldn’t expect the Loonie to react to domestic economic data but rather to the BoC policy and the US-China trade war.
Indeed, external factors like the Sino-US trade conflict and oil prices have had the greatest impact on the CAD in the last few weeks.