GBP/CAD Exchange Rate Edges Higher on Dovish BoC
UPDATE: The Canadian Dollar (CAD) fell against the Pound (GBP) following the Bank of Canada (BoC) decision to hold back on future rate hikes, possibly until next year.
The BoC policy statement read:
‘Governing Council judges that an accommodative policy interest rate continues to be warranted. We will continue to evaluate the appropriate degree of monetary policy accommodation as new data arrive.’
The Pound, meanwhile, gained against the ‘Loonie’ on a lack of any notable Brexit developments.
However, comments from the US Ambassador to the UK, Woody Johnson raised concerns over a possible no-deal.
Mr Johnson said that a deal between the two countries would be ‘much more difficult’ if the UK remained in a customs union with the EU, adding that it would hinder the UK’s control of its own trade policy.
GBP/CAD Exchange Rate Flat as Economist says Canada’s Economic Future remains ‘Foggy’
The Pound Canadian Dollar (GBP/CAD) exchange rate stabilised today and is currently trading around CA$1.7395 on the inter-bank market.
The Canadian Dollar (CAD) steadied against the Pound (GBP) as traders awaited the Bank of Canada’s (BoC) interest rate decision for April, which is expected to hold at 1.75%.
Many ‘Loonie’ traders are remaining apprehensive however, as the Canadian economy has shown recent signs of slowing.
Frances Donald, the Head of Macroeconomic Strategy at Manulife Asset Management, commented on the situation:
‘Right now, the future is foggy. The best bet is probably to stay on the side-lines, continue to emphasize that there are both upside and downside risks to this economy and remind households, businesses and markets that on hold is a comfortable place to be for the foreseeable future.’
Any further comments during the BoC rate statement that the Canadian economy is taking a bearish turn could see the ‘Loonie’ fall against Sterling.
GBP/CAD Exchange Rate Stabilises as Public Sector Borrows Falls to 17-Year Low
The Pound (GBP) has remained stable against the Canadian Dollar (CAD) following the publication of the UK public sector net borrowing for March, which came in at a 17-year low of £0.840bn.
In Brexit news, Labour leader Jeremy Corbyn commented that Prime Minister Theresa May is not offering any crucial concessions to her Brexit deal.
This has left the UK in a state of ongoing political uncertainty as cross-party talks stall, with Corbyn commenting:
‘We cannot go on hearing this tired old mantra that the Brexit agreement has to be adhered to. We will see how it goes, but the government does really need to move on with it.’
Theresa May’s approval ratings have also slipped to a record low, indicating increasing divisions within the Conservative Party over her leadership.
Another indication of a fracture developing within the party can be seen in the news that the former Tory MP Ann Widdecombe’s is returning to the ‘political fray’.
This time it is in support of Nigel Farage’s Brexit party, stepping up as a candidate for the upcoming European elections.
GBP/CAD Forecast: Sterling Could Rise on Constructive Cross-Party Brexit Talks
There are no notable Canadian or UK economic data releases due out tomorrow.
Many ‘Loonie’ traders, however, will be focusing on geopolitical developments this week as the Canadian economy is particularly sensitive to US-China trade developments, with its economy heavily reliant on trade with the two superpowers.
And with recent news that the US will send a trade delegation to China next week, market hopes are likely to rise on any signs of a possible trade deal emerging, which would prove beneficial for the CAD/GBP exchange rate.
Pound (GBP) traders, meanwhile, will likely remain fixated on Brexit developments for the rest of this week, and with any indications of a progression with cross-party talks, this could see the GBP/CAD exchange rate rise.