GBP/CAD Exchange Rate Rangebound as Canadian Economy Returns to ‘Potential Growth’
The Pound Canadian Dollar (GBP/CAD) exchange rate steadied today and is currently trading around CA$1.636.
The Canadian Dollar (CAD) held steady against the Pound (GBP) following the Bank of Canada’s (BoC) interest rate decision yesterday, which remained unmoved at 1.75%.
The BoC said in its statement:
‘Recent data show the Canadian economy is returning to potential growth. However, the outlook is clouded by persistent trade tensions. Taken together, the degree of accommodation being provided by the current policy interest rate remains appropriate.’
Although this has stabilised the pairing today, many CAD traders are remaining cautious as US-China trade discussions have not yet concluded on any definitive terms.
Josh Nye, a Senior Economist at RBC Economics Research, added:
‘Concerns about trade tensions and slowing global growth received top billing in the statement, unlike in May when signs of a firming domestic economy were highlighted.’
GBP/CAD Exchange Rate Flat as Pound Traders Brace for BoE’s Financial Stability Report
The Pound improved ahead of today’s Bank of England (BoE) financial stability report.
This will assess the health of the UK’s economy, while outlining any of the BoE’s actions to reduce or remove risks.
BoE’s Governor Mark Carney will be delivering a statement following the report.
UK markets will be racing for any indications of further risks surrounding the global economic outlook and falling inflationary pressures.
Any dovish comments from Mr Carney, therefore, could see the GBP/CAD exchange rate begin to fall.
In UK political news, Tory leadership favourite Boris Johnson has come under increasing pressure following the resignation of the UK envoy to the US, Sir Kim Darroch, following leaked comments critical of President Donald Trump.
As a result many Sterling traders are remaining cautious as UK political tensions intensify.
GBP/CAD Forecast: Pound Could Begin to Sink on Heightened Brexit Uncertainty
Canadian Dollar traders will be awaiting the new housing price index figures for May today.
These are expected to improve from 0.0% to 0.1%, potentially providing some uplift for the GBP/CAD exchange rate.
The Pound, meanwhile, will remain sensitive to any indications of a dovish stance from the BoE.
Tomorrow, however, will see a speech by Dr Gertijan Vileghe, a member of the central bank’s Monetary Policy Committee.
If he provides any further evidence that the UK’s economy is struggling from Brexit uncertainty, we could see the GBP/CAD exchange rate begin to sink.