GBP/CAD Turns Volatile on UK Election, US-China Trade Deal

GBP/CAD surged yesterday in the evening after exit polls showed that UK Prime Minister Boris Johnson’s Conservative Party won a major victory. However, the pair has lost part of the gains as the Loonie is driven by the Sino-US trade optimism.

Currently, one British pound buys 1.7639 Canadian dollars, up 1.67% as of 10:43 AM UTC. Yesterday, the prices hit a daily peak at 1.7794, which is the highest level since March of this year.

Yesterday, the price was very volatile, touching a daily low at 1.7209. The quotation surged late in the evening when it was clear that Conservatives secured a historic win that would allow Johnson to break the Brexit deadlock.

The official results at the time of writing show that Johnson’s party came in at 43.6%, obtaining 364 seats. The opposition Labour Party was on 32.2%, with 203 seats. This is the worst results for the Labours since 1935. The party’s social leader Jeremy Corbyn announced that he would step down, though he didn’t specify the timing.

On the other side, Johnson promised he would get Brexit done as pledged, telling first-time Conservative voters that he wouldn’t let them down. The PM told supporters earlier today:

“We will get Brexit done on time by the 31st of January, no ifs, no buts, no maybes.”

The European leaders welcome the results, saying that they provide clarity on Brexit. European Central Bank’s Vice-president Luis de Guindos commented:

“The results of the elections in Great Britain are positive because they eliminate uncertainty in the short term.”

Johnson called for the early election on several occasions, but the UK Parliament approved his proposal only last month. The PM hoped to consolidate his party’s position in the parliament, and he nailed it.

The sterling’s gain against the Canadian dollar would probably be closer to 2% by now, but the Loonie shows resilience amid increased trade optimism. Yesterday, US President Donald Trump met with his trade advisers and decided to sign off a limited trade deal with China. As a result, the US will give up the new tariffs set to take effect this Sunday. On the other side, China has to buy agricultural products from the US.

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