- UK currency weak overall on approaching BoE announcements
- Expectations currently mixed on whether any MPC members will vote for rate cut
- Canadian Dollar stable against peers after differing forecasts for wildfire aftermath
- A dovish BoE decision or outlook could send Pound diving
The Pound has been an uncertain prospect against the Canadian Dollar and other peers today and it is likely to remain in this condition until noon’s Bank of England (BoE) announcements.
The Canadian Dollar has actually been staging something of a recovery of late, potentially due to optimism regarding the reconstruction efforts in the aftermath of the wildfires that have recently affected Alberta.
UK Economic News: Pound Softens on Concerns that Certain MPC Members May Vote for Rate Cut
The Pound has been unable to make any major headway against its peers of late, owing to the day’s most important UK domestic data; the BoE interest rate decision, minutes and inflation rate report. Additionally, it is expected that BoE Governor Mark Carney will be giving a press conference shortly after the BoE’s announcements have been made.
The uncertainty prevalent on the possible outcome of the BoE’s decision is evident in Pound Sterling exchange rate movements; Sterling has risen by 0.2% against the Euro (GBP/EUR) and by 0.3% against the Polish Zloty (GBP/PLN), but has otherwise fallen slightly verses the Canadian Dollar (GBP/CAD) and trended in a tight range against a majority of its other peers.
The BoE decision is due at noon but economists have already been having their say on what could be the biggest news from the announcements.
Hargreaves Lansdown Senior Analyst Laith Khalaf has said that:
‘The big elephant in the room is the possibility of ‘Brexit’…whatever Mark Carney has to say about the UK economy, it’s all going to be overshadowed by his comments on ‘Brexit’’.
Regarding the interest rate decision itself, a hike is firmly out of the picture, but speculation has been growing that at least one Monetary Policy Committee (MPC) member may vote to cut the interest rate. Such an outcome would likely send the Pound diving due to the dovish implications.
Canadian Dollar (CAD) makes Partial Gains on Optimism from Alberta Oil Producers
The ‘Loonie’ has actually been faring better than the Pound overall recently, thanks to news pointing to a relatively quick turnaround in oil production in the wake of the Alberta wildfires.
According to BMO Capital Markets Senior Economist Benjamin Reitzes:
‘At this point it looks as though [oil production] will be more on the transitory side. The worst fears have not been realised’.
In addition to optimism from key employers in the sector, attitudes about Canada’s economic future have been lifted further by the news that the Canadian Red Cross will be making unprecedented levels of relief payments to residences displaced by fire-affected areas.
The ‘Loonie’ has risen by 0.2% against the Pound Sterling (CAD/GBP) and 0.5% against the Australian Dollar (CAD/AUD) today, with other movements mainly being in positive ranges.
Future GBP, CAD Forecast: BoE Resilience against ‘Brexit’ Pressures will Determine Pound Movement
The coming hours for the UK will be key in deciding how investors regard the Pound; if the BoE is overwhelmingly dovish in its outlook, the Pound can be expected to tumble, while a more balanced response may leave it unchanged.
Canada’s ecostats this afternoon will consist of the new housing price indices for March, which are expected to fall on the month and rise on the year.
Current GBP, CAD Exchange Rates
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate was trending in the region of 1.8548 and the Canadian Dollar to Pound Sterling (CAD/GBP) exchange rate was trending in the region of 0.5396 today.
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