GBP/CAD continues to expand its gains on Thursday. Currently, one British pound buys 1.7163 Canadian dollars, up 0.02% as of 10:59.
The price surged yesterday after US President Donald Trump signed the Hong Kong legislation that supports pro-democracy protesters in Hong Kong. The move comes in a period in which US and China are negotiating a potential “phase one” trade deal.
Beijing pledged to retaliate, though no-one knows what specific counter measures China will take.
Chinese Vice Foreign Minister Le Yucheng has already summoned US Ambassador Terry Branstad as a first step, and asked the US to stop meddling with China’s internal affairs.
China’s Ministry of Foreign Affairs said in a statement:
“This is a pure interference in China’s internal affairs. This bill, which has been denounced by all Chinese people, including Hong Kong compatriots, is full of prejudice and arrogance. It treats Hong Kong with intimidation and threats.”
National currencies of trade-reliant economies, such as the Loonie, are declining on fears that the Hong Kong situation might deteriorate US-China relations amid trade talks.
Elsewhere, the pound is additionally supported by a more-than-expected increased in British house prices. Mortgage lender Nationwide said that house prices this month increased by 0.8% year-on-year, which is the biggest gain since April of this year. Economists surveyed by Reuters expected the indicator to increase by 0.2%. Thus, it seems that the national election scheduled for December 12 is not putting further pressure on the housing market.
Nevertheless, the housing sector is experiencing a slowdown anyway. It is the 12th month in a row when annual growth keeps below 1%. For comparison, right before the Brexit referendum in 2016, house prices used to expand an annual rate of about 5%.
Nationwide’s chief economist Robert Gardner said that housing prices typically showed little volatility ahead of elections. He stated:
“Rightly or wrongly, for most home buyers, elections are not foremost in their minds while buying or selling their home.”
The sterling would have probably maintaining its bullish stance against the CAD, but the currency is dragged down by CBI data according to which the profits of British services firms declined by the most in eight years. CBI chief economist Rain Newton-Smith said:
“The current economic climate is holding back UK services firms, which are reporting falling sentiment, declining volumes and weaker profitability. Neither is the outlook expected to improve.”