GBP/CAD Exchange Rate Tumbles as BoC Pushes Forward With Hike
UPDATE: The Pound Canadian Dollar (GBP/CAD) exchange rate has fallen around 1% or over a cent in trade this afternoon as the Bank of Canada (BoC) chose to raise interest rates following its latest policy meeting.
Bank of Canada increases overnight rate target to 1 ¾ per cent #cdnecon https://t.co/2UorGytiXM
— Bank of Canada (@bankofcanada) October 24, 2018
The bank suggested that in light of solid global growth and confidence that the new US-Mexico-Canada Agreement (USMCA) would help to reduce trade uncertainty the Canadian economy is now operating close to its potential and that a hike was warranted.
This intensified the selloff in GBP/CAD from earlier in the session as Sterling came under pressure from growing Brexit uncertainty.
GBP/CAD Exchange Rate Lifted as Crude Prices Plummet
UPDATE: The Pound Canadian Dollar (GBP/CAD) exchange rate edged higher on Tuesday afternoon, as a near 3% slump in crude priced put considerable pressure on the oil-sensitive ‘Loonie’.
This rout in prices came following comments from Saudi Energy Minister Khalid al-Falih in which he suggested Saudi Arabia is ready to ramp up crude production in needed.
Saudi Arabia gave the strongest indication yet that it’s trying to stop oil prices from rising further, saying that OPEC and allies are in a “produce as much as you can mode” https://t.co/lzNsibEdbu via @JavierBlas @viviannereim #OOTT pic.twitter.com/Se5aQuS65z
— Stuart Wallace (@StuartLWallace) October 23, 2018
Meanwhile lending some strength to Sterling were reports suggesting that the EU is prepare to offer Theresa May a UK-wide customs union, potentially allowing her to sidestep any need for an Irish border backstop.
GBP/CAD Exchange Rate Fluctuates as Brexit, Mixed Data Weigh on Sentiment
Trade in the Pound Sterling Canadian Dollar (GBP/CAD) exchange rate was erratic last week, with a mixture of Brexit anxiety and variable data resulting in some notable volatility in the pairing.
Sterling had a particularly rough time of it last week as an undercurrent of Brexit uncertainty played havoc with the currency throughout the session, with the failure to break a deadlock in talks resulting in Theresa May leaving the latest EU summit empty handed.
In terms of data it proved to be a mixed bag for GBP as well, with the gains made from the UK’s shock jump in wage growth, being almost immediately wiped out by some weaker-than-expected inflation figures.
However it wasn’t just the Pound that faced some lacklustre inflation figures last week as a marked fall in Canadian inflation last month forced the Canadian Dollar to retreat at the very tail end of the session, resulting in GBP/CAD closing the session virtually unchanged from the week’s opening rate.
Pound Sterling (GBP) Exchange Rates Pressured as May’s Future in Doubt
The Pound (GBP) is currently rangebound against the Canadian Dollar (CAD), with Sterling looking to steady itself after suffering some heavy losses at the start of this week’s session.
These losses came amid reports that Prime Minister Theresa May could face a vote of no confidence this week amid growing criticism from both pro-remain and pro-leave Conservatives over how she is handling Brexit negotiations.
Things were made even worse when it emerged that the DUP would throw its support behind legislation proposed by rebel Tories to block an Irish border backstop, something which was seen as heaping even more political pressure on Downing Street.
While the Pound has bottomed out against the Canadian Dollar this morning, this appears to be mostly driven by a lowering of oil prices weighing on the ‘Loonie’, with the likelihood of further Brexit jitters likely to limit any notable recovery in GBP exchange rates.
GBP/CAD Exchange Rate Forecast: Will the BoC Raise Interest Rates this Week?
Looking ahead, the most notable event on data calendars this week looks set to be the Bank of Canada’s (BoC) rate decision on Wednesday.
Coming up Wednesday – our interest rate decision. #cdnecon #PolicyRate https://t.co/rfCUxo1dMP pic.twitter.com/8zoLHd9Bl5
— Bank of Canada (@bankofcanada) October 22, 2018
Despite September’s less-than-impressive inflation figures the majority of economists still appear confident that the BoC could still deliver a rate hike this week, something which could prompt some considerable losses in the Pound Sterling Canadian Dollar (GBP/CAD) exchange rate.
Meanwhile, the absence of any notable UK data is likely to hinder Sterling’s ability to stave off losses this week, particularly in the face of ongoing Brexit angst and rising domestic political uncertainty.