GBP/CAD is declining on Thursday, after losing 0.17% yesterday. Currently, the pair is trading at 1.7205, down 0.34% as of 11:05 AM UTC.
The Loonie extended its rally on the news that China would halve more tariffs levied against goods imported from the US. The move comes about a month after the world’s two largest economies signed a phase one trade deal. Canada is a trade-reliant economy, which is why its national currency is quite responsive to relevant global trade events.
China’s finance ministry announced earlier today that starting from February 14, additional tariffs levied on certain products will be slashed to 5% from 10% and others will be cut to 2.5% from 5%.
The finance ministry stated that the move coincides with the tariff cuts announced by the US on Chinese goods, which are also due on February 14.
Raymond Yeung, a senior economist at ANZ, commented:
“This like-for-like reduction is a reciprocal action, a consistent stance the Chinese government has adopted throughout the trade war.”
Separately, China’s Global Times reported earlier today that the government was pondering using a clause in the trade deal that touches upon disasters, citing a trade expert close to the Chinese government who hinted on the coronavirus outbreak.
Elsewhere, the Pound sterling continues to weaken amid post-Brexit uncertainty and after the National Institute of Economic and Social Research (NIESR) said that the goal of UK finance minister Sajid Javid of doubling the rate of the GDP growth has only a chance of only 20% to succeed. The think tank said in a Thursday report that such a target would be challenging to achieve.
Arno Hantzsche, principal economist at NIESR, told the media:
“The chancellor’s aim of raising growth towards the post-war average – nearly 3% – is quite unrealistic.”
To achieve that goal, the UK has to get to growth in output per hour of about 2.5% per year on average, NIESR stated. However, statistics show that it has taken more than a decade to boost productivity by that much.
