Pound Canadian Dollar Exchange Rate Trading in Narrow Range as Investors Brace for BoE Rate Decision
The Pound Canadian Dollar (GBP/CAD) exchange rate is directionless in the beginning of today’s session as investors are cautious ahead of the Bank of England’s (BoE) upcoming interest rate decision.
At the time of writing, the GBP/CAD exchange rate is trading at approximately CA$1.7173, with minimal market movement from today’s opening levels.
Pound (GBP) Muted Ahead of BoE Interest Rate Decision
The Pound (GBP) is mixed against the Canadian Dollar (CAD) at the beginning of today’s session as investors await the Bank of England (BoE)’s interest rate decision.
On Thursday, the BoE is forecast to raise interest rates from 0.25% to 0.5%, followed by a monetary policy statement.
However, should the statement signal a hawkish policy outlook , it may bolster Sterling .
In addition, the ‘partygate’ scandal remains in the media headlines as the Met Police continue to investigate the matter.
Boris Johnson, the UK Prime Minister, is under fire as a growing number of Conservative MP’s submit letters of no confidence to the 1922 committee.
If 54 letters are received and Johnson loses the vote of no confidence, he will be forced to step down.
Although this has been a rising issue for the past few weeks, Johnson’s inability to answer a number of questions yesterday has caused frustration amongst his government.
Conservative MP, Tobias Ellwood, said:
‘[It is] just horrible for all MPs to have to defend this to the British public.
‘[Mr Johnson] himself should call a vote of confidence rather than waiting for the inevitable 54 letters.
‘I will be submitting my letter today to the 1922 Committee.’
This is weighing on the Pound’s potential today as the political landscape remains unstable.
Canadian Dollar (CAD) Directionless Ahead of BoC Speech
Meanwhile, the Canadian Dollar (CAD) is trading flat against the Pound (GBP) as investors await the Bank of Canada (BoC)’s deputy governor, Toni Gravelle’s, speech later this afternoon.
Gravelle will be participating in the ‘Canadian Benchmark Reform – The Road Ahead’ conference discussion, held at the International Swaps and Derivatives Association (ISDA).
Should Gravelle provide any hints with regards to BoC’s future monetary policy, it may impact the ‘Loonie’.
On the other hand, the commodity-linked CAD is being buoyed this morning by oil prices, with Brent crude currently at $88.70 per barrel, marginally down from last week’s 8-year high.
As Russia-Ukraine tensions remain high, greater demand for oil and potential sanctions on Russia could offer support to CAD.
GBP/CAD Exchange Rate Forecast: BoE Rate Decision Centre Stage
Looking ahead, the Bank of England’s and upcoming rate decision will act as a key catalyst for the Pound Canadian Dollar (GBP/CAD) exchange rate.
If BoE provides strikes a notably hawkish tone, this may could propel GBP exchange rates sharply higher.
Elsewhere, Canadian employment figures, scheduled for release on Friday, may weigh on the ‘Loonie’s appeal.
January’s unemployment rate is forecast to increase from 5.9% to 6.2%, whilst January’s employment change is predicted to slump to -117.5K from 54.7K.
If this prints true, it will show that less individuals are in employment which will hamper the Canadian economy, and in turn, the ‘Loonie’.
On the other hand, if the Russia-Ukraine tensions continue to build then this will lift the price of oil and the commodity-linked currency.
Sterling, however, will remain at the mercy of the UK’s political landscape.