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GBP/CAD surges on Monday on increased Brexit optimism. The pair is currently trading at 1.7127, up 0.37% as of 10:34. The pound is driven by the hopes that the Conservative Party will win the national election next month and Prime Minister Boris Johnson will finally end the Brexit saga. Elsewhere, the Loonie cannot get any hints from the US-China trade negotiations, as uncertainty still persists.
Nevertheless, the pair departed from the recent six-month peak reached last Thursday, crashing on two separate occasions, Thursday and Friday. Initially, the Canadian dollar was boosted by comments from Bank of Canada Governor Stephen Poloz. He said that the country’s monetary conditions were about right given the global economic challenges. The next day, the sterling crashed on disappointing PMI data.
Now the pound is looking stronger after Johnson promised to put his Brexit deal to the vote in Parliament before Christmas. He also presented the Conservative Party’s manifesto for the election scheduled on December 12. The 59-page document pledges to “get Brexit done” in line with the current deadline.
“We will not extend the implementation period beyond December 2020,” Johnson said during the launch of the manifesto.
Besides, the Tories ruled out increase in taxes, unlike the opposition Labour Party, which plans to raise taxes on the wealthy and corporations in an effort to boost state funding.
So far, Johnson’s party seems to be ahead of the opposition, according to most opinion polls. Speaking at an event in Telford, the PM said:
“Get Brexit done and we shall see a pent up tidal wave of investment into this country. Get Brexit done and we can focus our hearts and our minds on the priorities of the British people.”
Last week, US banking giant Goldman Sachs said in a note to investors that it anticipated a GBP rally next year, citing the resolution of the Brexit process. Goldman analysts noted:
“Our economists think a victory for the Conservative Party in next month’s election would likely result in a fairly swift resolution of the Brexit process, as well as more expansionary fiscal policy.”
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