The Pound Canadian Dollar (GBP CAD) exchange rate continues to press higher this morning as investors await the BoE rate decision later this week.
Pound (GBP) Bolstered by BoE Speculation
The Pound has continued to bound higher this morning as markets brace for the Bank of England (BoE) rate decision on Thursday.
There is particular focus on the meeting as after months of speculation, the BoE is widely expected to vote to implement its first rate hike in nearly a decade this week.
Analysts currently expect the bank to raise rates by 0.25% in November, reversing the rate cut implemented by the BoE last year in reaction to Britain’s vote to leave the European Union.
However Sterling’s potential gains on the back of a rate hike may be tempered by the tone of the BoE regarding its plans for future hikes, with sentiment in the UK currency likely to dip if the bank hints that the hike is a one-off rather than the start of a new tightening cycle.
Canadian Dollar (CAD) Weakens as Economy Shrinks
Meanwhile the Canadian Dollar has come under pressure this afternoon with the release of Canada’s latest GDP report.
According to figures published by Statistics Canada the domestic economy declined 0.1% in August having been flat the month before and disappointing investors who has expected economic growth to have picked up to 0.1%.
The decline appears to have been largely driven by a notable decline in Canada’s manufacturing sector as it shrank 0.7% in August, offsetting a 0.1% rise in the service sector.
GBP CAD Forecast: UK Manufacturing Activity to Slow Slightly?
Looking ahead to the rest of the week while markets are likely to focus most of their attention on the BoE’s rate decision on Thursday the release of the UK’s latest Manufacturing PMI tomorrow could still prompt some movement in the GBP CAD exchange rate, especially if the index beats expectations.
Meanwhile Canada will release a glut of data on Friday that may help the Canadian Dollar to claw back some of its recent losses, with economists forecast that both Canada’s latest Trade Balance and employment figures will have shown some improvement over the past couple of months.
Current Interbank Exchange Rates
At the time of writing the GBP CAD exchange rate was trending around 1.7076 and the CAD GBP exchange rate was trending around 0.5850.