The Pound Canadian Dollar (GBP/CAD) exchange rate dropped by -0.9%, leaving the pairing fluctuating around CA$1.618.
Sterling plummeted against many of its competitors today as no-deal Brexit fears soared following Tory leadership hopefuls Boris Johnson and Foreign Secretary Jeremy Hunt have hardened in their position on the Northern Irish backstop.
Both potential prime ministers commented that the backstop idea was effectively ‘dead’, and would not be included in negotiations with the European Union.
Neale Richmond, the Brexit spokesman for Ireland, commented:
‘The backstop is a vital aspect of the withdrawal agreement, an aspect that was developed in light of the UK government’s own red lines… [I]t gives all sides the vital insurance policy to allow a new relationship between the EU and the UK to be formulated. The withdrawal agreement is the only vehicle towards a managed Brexit.’
The release of the UK average earnings figures for May, meanwhile, rose to an 11-year high while beating forecasts at 3.6%.
Alok Sharma, the Employment Minister, said:
‘Wages outpacing inflation for 16 months in a row, more people in work than ever before and joint-record female employment, means better prospects for many thousands of UK families and shows the continued resilience of the UK labour market.’
UK unemployment figures also held steady at 3.8% - a 45-year low.
Today’s economic data, however, has been overshadowed by heightened no-deal fears.
The Canadian Dollar benefited from the soaring US Dollar today following encouraging US economic data.
Many ‘Loonie’ traders are also optimistic ahead of the Bank of Canada’s release of inflation data tomorrow, which is forecast to increase.
Today also saw the news that the BoC would take over the administration of the Canadian Overnight Repo Rate Average, which has further boosted optimism in the Canadian economy.
BoC Deputy Governor Lynn Patterson said:
‘Having the central bank being the administrator helps with the transition process as it adds a level of robustness.’
The Pound Canadian Dollar (GBP/CAD) exchange rate will, however, remain sensitive to developments surrounding Brexit.
If either Tory leadership candidate shows any signs of easing his stance on Brexit we could see the Pound improve.