GBP/CAD Exchange Rate Falls: Canadian Dollar Benefits from Upbeat Market Mood
The Pound Canadian Dollar (GBP/CAD) exchange rate fell today after the Bank of Canada’s (BoC) held its interest rate at 0.25%. The pairing is currently fluctuating around C$1.75.
Canadian Dollar (CAD) investors are confident that the BoC will take a more bullish stance in its monetary policy statement, however, due to a positive outlook for the global economy.
Francesco Pesole and James Knightley, analysts at ING, commented:
‘This week’s Bank of Canada meeting is expected to result in the weekly government bond purchases being cut from C$4bn to C$3bn as evidence mounts that the Canadian economy will make a full recovery from the pandemic within the next six months. We think that the bank will broadly match such expectations.’
As a result, the GBP/CAD exchange rate has benefited from growing confidence in Canada’s economy, despite the nation’s rising number of Covid-19 cases.
Added to this, growing Canadian business confidence has also boosted the ‘Loonie’.
According to a survey by Modus Research, business leaders economic confidence has improved since the beginning of the Covid-19 pandemic.
Modus Research commented:
‘By contrast, executives view the health of their organization much better than the health of the economy. While still lower than pre-COVID, the number saying the current economic health of their company is good is at its highest level in over a year (48%). In addition, twice as many executives anticipate a better economic outlook for their organizations over the next 12 months compared to March last year.’
Pound (GBP) Struggles Despite Rising UK Home Sales
The Pound (GBP) fell against the Canadian Dollar (CAD) today despite UK home sales rising at their fastest rate since 2005.
Nicky Stevenson, the managing director at the national estate agent group Fine & Country, said:
‘The property market remains in a parallel universe at odds with the wider reality everyone has been living.
‘It’s been a gloom-defying 12 months, given that last March, when the first lockdown arrived, the market seized up, mortgage products were withdrawn and everyone held their breath.’
Today also saw UK inflation edge up in March to 0.7% as the UK’s economy reopens from Covid-19 lockdown.
Analysts at Reuters said:
‘British inflation is forecast to rise in the coming months, due to an increase in regulated household energy bills in April, higher global oil prices and comparisons with prices a year ago when COVID lockdowns caused demand to slump.’
With the UK’s Covid-19 cases remaining relatively low compared to earlier this year and lockdown restrictions being eased, GBP investors have become more confident about the outlook for the nation’s economy.
GBP/CAD Exchange Rate Forecast: Could an Improving in UK Consumer Morale Boost Sterling?
Canadian Dollar (CAD) traders will be looking ahead to tomorrow’s release of the Canadian New Housing Price Index for March.
Any improvement in the outlook for the Canadian economy would be CAD-positive.
Pound (GBP) investors will be looking ahead to April’s UK GfK Consumer Confidence report.
If consumer morale has improved in Britain, then the Pound Canadian Dollar would head higher.