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How Brexit And The US China Trade War Affects The Canadian Dollar

September 9, 2019

If you will notice the latest pound to CAD Forecast shows that the Canadian dollar is sensitive to recent Brexit developments in the United Kingdom as well as the ongoing uncertainties over global trade. Uncertainty in global trade is affecting the strength of the Canadian dollar because it is a commodity currency.

Lots of commodities are being exported by Canada including oil. If the global economy slows down, there is a negative effect on the Canadian dollar. Renewed pressure is also expected against the Canadian dollar after US President Trump imposed higher trade tariffs on China.

The move to impose higher tariffs on Chinese products hit the financial market negatively even if China appeared to be calm. Donald Trump predicts a trade deal but still there is potential for volatility on any trade statements and developments from the political leaders in the coming days.

The pound to Canadian dollar faces a potential rocky ride. Boris Johnson has recommitted to Britain leaving the European Union by October 31, 2019. Boris Johnson is facing attacks from the left and right of the political spectrum. Meetings are being held by MP’s from opposition parties including Jeremy Corbyn so that a no Brexit deal can be stopped from happening.

Legislative means are being used by various groups to stop Britain from leaving the EU without any withdrawal agreement. This is something that the Prime Minster can use as a leverage to negotiate a better deal for the UK.

Markets are preparing for the possibility of a general election that may be held in autumn which means that there can be a high period of volatility for the British pound and Canadian dollar in the weeks to come. The risk for the British pound to the Canadian dollar is the pound tends to fall in the run up to an election although it is invariably difficult to predict.

With uncertainties over the global economy and the Brexit, it is important to be updated with daily CAD Forecast to be informed on how the Canadian dollar stands amidst the world’s currencies. This is particularly true for those who are involved in currency exchange trade.