GBP/CAD Falls 2.3% after UK Election
The Pound to Canadian Dollar fell over 2.3% overnight after the UK election returned a politically unstable hung parliament.
GPB/CAD fell from 1.7497 just before the exit polls on Thursday, to lows of 1.7094 after their publication.
The exit polls accurately predicted the final result.
The Pound lost ground due to fears a hung parliament might create too much instability for the UK to negotiate an adequate Brexit deal with the EU.
Now the latest news it that prime minister Theresa May has formed a coalition with the Northern Irish DUP party, which has given her a working majority, and markets have stabilised.
The DUP are in favour of a softer Brexit and a more permeable border with Southern Ireland which could raise hopes of a more pragmatic approach to Brexit negotiations which may protect the economy more, but it early days and there will be many stakeholders to consider in the coalition.
The Pound to Canadian Dollar complex then came under further pressure on Friday afternoon after Canadian Employment data showed impressive gains in May.
Canadian payrolls rose by 55k in May, easily beating the 11k rise forecast by analysts.
The Unemployment Rate remained at 6.6% but this was more because of an increase in the total number of people looking for work than from more people losing their jobs.
The balance of full and part-time workers changed in favour off more full-time workers which also improved the outlook for the economy.
The number of full-time employees rose by 77k in May, from a -31k fall reported in April.
The number of new part-time workers fell by -22.3k in May, from 34.3k in the previous month.
Earnings rose too, with average hourly earnings increasing by 1.0% from 0.5% previously.
“It was an excellent May for Canadian employment, with the 55K increase trouncing more muted expectations. The composition of the job growth also pointed to healthy momentum for Canadian pocket books, with gains in full-time and paid positions leading the way. So there’s evidence that the economy carried momentum beyond what was a strong Q1 for GDP. The unemployment rate rose a tick, but that was a result of a higher participation rate—another positive for the economic outlook,” commented Nick Exarhos of CIBC economics.
