GBP/CAD Continues Downtrend as EU Cannot Decide Brexit Extension Length

GBP/CAD has continued its downtrend on Friday, losing 0.13% by now and being in free fall. Currently, one British pound buys 1.6774 Canadian dollars as of 10:20 AM UTC.

The pair hit the highest level in four months on October 17, when the UK Prime Minister Boris Johnson reached a Brexit agreement with the European leaders. However, the pound has lost momentum after the UK parliament refused to vote in favor of the deal last Saturday. Nevertheless, MPs finally endorsed the Withdrawal Agreement Bill (WAB) on Tuesday but refused to accelerate the process according to Johnson’s plans.

The parliament’s indecision and hesitation put pressure on the GBP/CAD pair, which departed from the temporary peak. On the other side, the Canadian dollar looks stronger after the national election on Monday, when Liberal Party leader Justin Trudeau maintained his position as Prime Minister, even though his party cannot form a majority government at this time.

EU Pondering Another Extension

GBP/CAD intensified its bearish stance after PM Boris Johnson announced yesterday that he would seek the parliament’s approval for another national election on December 12. By doing this, Johnson hopes to avoid the parliament’s hurdles with the popular vote, even though he failed to gain MPs’ nod for an election on two occasions last month.

Elsewhere, European ambassadors are meeting today to decide whether to grant another extension beyond the current deadline set for October 31 and discuss its length.

Recently, one of the EU officials told Reuters that he would be surprised if the envoys reached a decision by the end of the day. Thus, it is likely that the European Union will delay its decision at least until Monday, after the UK parliament decides whether to allow Johnson to hold an election in December. Separately, another official told media that the EU might decide in favor of an extension, but without setting any specific date for now.

In the UK, Jeremy Corbyn, leader of the Conservative Party, said that his party, now in opposition, might support the proposal for an election but Johnson had to rule out a no-deal Brexit.

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