Pound Canadian Dollar (GBP/CAD) Exchange Rate Ticks Higher Following BoC Inaction
The Pound Canadian Dollar (GBP/CAD) exchange rate is firming this morning, as markets continue to analyse the Bank of Canada’s (BoC) interest rate decision.
At the time of writing, GBP/CAD is trading at around CA$1.7100, an increase of just under 0.2% from the morning’s opening rates.
Canadian Dollar (CAD) Listless as Markets Digest BoC Decision
The Canadian Dollar (CAD) is floundering this morning, as investors continue to mull the Bank of Canada’s latest interest rate decision.
Yesterday, the BoC kept interest rates unchanged at 5%, noting that the approach appeared to be working. Price pressures appeared to be on a downtrend, with Canadian inflation steadily cooling.
Furthermore, the Canadian labour market is similarly cooling. However, rent and housing costs remain elevated. The BoC identified that core inflation appeared sticky, but remained optimistic.
The BoC’s accompanying report stated:
‘With further signs that monetary policy is moderating spending and relieving price pressures, Governing Council decided to hold the policy rate at 5% and to continue to normalize the Bank’s balance sheet. Governing Council is still concerned about risks to the outlook for inflation and remains prepared to raise the policy rate further if needed.’
However, oil prices are on an upswing following yesterday’s sharp sell-off. Due to the Canadian Dollar’s crude-linked nature, this is likely cushioning it from steeper losses as investors eye BoC rate cuts.
Pound (GBP) Muted amid Data Drought
The Pound (GBP) is wavering this morning, as macroeconomic data remains few and far between. As such, GBP investors once again have little to sink their teeth into, leaving GBP to trade largely on market dynamics.
As an increasingly risk-sensitive currency, the morning’s downbeat market mood is serving to limit GBP’s appeal.
Furthermore, investors are likely mindful of yesterday’s cautious comments from Bank of England (BoE) Governor Andrew Bailey. While Bailey reiterated the BoE’s plan to maintain interest rates as is for an extended period, he further acknowledged the need for caution.
Pound Canadian Dollar Exchange Rate Forecast: BoC Speech in Focus
Looking ahead for the Canadian Dollar, BoC Governor Tiff Macklem is due to deliver a speech this evening. Following yesterday’s inaction, his words could fail to inspire CAD investors unless he takes a decisively hawkish stance.
Oil price volatility is likely to remain a significant catalyst of movement for the ‘Loonie’ too, due to its crude-sensitive nature. If concerns about economic slowdown in the US and China persist, prices could weaken further, which would weigh on CAD.
For the Pound, the rest of the week is set to continue the recent trend of sparse data. Because of this, Sterling is likely to trade on risk appetite.
As an increasingly risk-sensitive currency, a shift to bearish trade could weaken GBP exchange rates. However, upbeat trade could strengthen Sterling against safer assets.