(Updated 16:50 17/03/22)
The Pound Canadian Dollar (GBP/CAD) exchange rate continued to trend sideways today.
The Pound (GBP) dipped following the Bank of England’s (BoE) decision to raise interest rates by 0.25%. Markets considered this to be a dovish stance in comparison to their expectations. Sterling fell in response to a this souring sentiment.
The Canandian Dollar (CAD) remained buoyed as oil prices continued to climb. The price of crude per barrel has risen by roughly 7% today and sits at around $102 per barrel.
At time of writing the GBP/CAD exchange rate is at around $1.6648, nearly unchanged from today’s opening figures.
Pound Canadian Dollar (GBP/CAD) Exchange Rate Subdued as Investors await BoE Meeting
The Pound Canadian Dollar (GBP/CAD) exchange rate is trading within a narrow range today. Bets on the Pound (GBP) are limited ahead of the Bank of England’s (BoE) interest rate decision today. Additionally, climbing oil prices have helped to boost the Canadian Dollar (CAD). This is keeping the currency pair subdued.
At time of writing the GBP/CAD exchange rate is at around $1.6684, virtually unchanged from this morning’s opening figures.
Pound (GBP) Ticks Higher as BoE Expected to Hike Interest Rates
The Pound (GBP) is edging higher against its rivals today. Bets on Sterling are limited ahead of the Bank of England’s interest rate decision later today. Continued hopes for productive Ukraine-Russia peace talks have helped spur a return of global risk appetite however. This is in turn preventing major losses for GBP.
The BoE is expected to raise interest rates for the third consecutive time on Wednesday. Markets have largely priced in a 0.25% rate hike from the central bank. Analysts feel that the outlook is less clear however.
The BoE is expected to act to combat soaring inflationary pressures which have only intensified amid the war in Ukraine. On the other hand, UK households are facing the worst cost of living squeeze in 50 years. Policymakers are concerned that higher rates could prompt a wage-price spiral. Some analysts feel that the BoE may surprise markets with a 0.5% rate hike. Sterling could jump should this occur.
Lee Hardman, currency analyst at MUG, said:
‘The UK rate market also appears to be fully pricing in the probability of larger 50bps (basis points) hike being delivered at one of the upcoming MP meetings before the summer with 105bps priced by the June. It sets a high hurdle for the BoE to deliver a hawkish policy surprise today.’
Canadian Dollar (CAD) Makes Limited Gains as Oil Prices Climb
The Canadian Dollar (CAD) is making mixed progress today. An uptick to crude oil prices and hotter than expected Canadian inflation is helping to boost CAD against the US Dollar (USD). An uncertain outlook over the Ukraine-Russia peace talks is limiting gains for the Canadian Dollar (CAD) elsewhere.
The price of crude oil has climbed roughly 3% so far today. Concerns over a tightening supply have helped to boost prices of the commodity. A report by the International Energy Agency (IEA) said the oil markets could lose three million barrels a day of Russian crude amid sanction. Further gains for crude prices could help the commodity-tied ‘Loonie’ edge higher.
CAD is also seeing any losses underpinned by higher than forecast inflation figures today. Canada’s rate of inflation rose to its highest point since 1991 on Wednesday. Soaring energy prices were a main driver as oil prices continue to climb amid the Russia-Ukraine conflict. The figures are likely to increase calls for a rate hike from the Bank of Canada (BoC) this year.
GBP/CAD Exchange Rate Forecast: Will BoE Surprise Markets with Higher Rate Hike?
Looking to the week ahead for the Pound, all eyes will be focused on the BoE’s interest rate decision on Wednesday. If the central bank shocks markets with a higher than predicted increase it could set GBP soaring.
For the Canadian Dollar, a forecast rise to retail sales in January could help boost the currency should figures print as forecast. The commodity-tied ‘Loonie’ is also likely to continue to be affected by the fluctuating price of crude oil and global risk appetite.