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Pound Canadian Dollar Maintains Upside – BoC Leaves Rates on Hold at 1.75%

Canadian Dollar Currency Forecast

BoC Rate Decision Fails to Stifle GBP/CAD Exchange Rate

Updated: The Canadian Dollar (CAD) failed to knock the Pound (GBP) off the top spot this afternoon, as Brexit optimism overshadowed the Bank of Canada’s (BoC) latest rate decision.

As was widely expected the BoC voted to leave interest rates unchanged at 1.75% this month, and absent any dovish signals from the bank in its forward guidance saw the ‘Loonie’ accelerate in broader trade.

However it failed to replicate this success against Sterling, which continued to find support from easing no-deal Brexit fears.null

GBP/CAD Exchange Rate Buoyed by Easing No-Deal Brexit Fears

The Pound Canadian Dollar (GBP/CAD) exchange rate is trending higher this morning, building on yesterday’s rally as Brexit concerns fade.

At the time of writing the GBP/CAD exchange rate is up by around 0.3% this morning, with the pairing trading at around CA$1.6171.

More Volatility Ahead for the Pound (GBP) as Politics Remain in Focus?

Another turbulent day in UK politics threatens to infuse further volatility into the Pound (GBP) today.

MPs voted yesterday to seize control of the agenda in the House of Commons, allowing them to table a bill compelling Boris Johnson to request another Brexit extension from the EU.

In response to his defeat Johnson accused MPs of ‘handing control’ of Brexit negotiations to the EU, and said he would have no choice but to seek snap election, claiming ‘the people of this country will have to choose’.

Johnson tabled a motion calling for a general election on Wednesday.

A debate and subsequent vote on the bill to delay Brexit will now take place later today, with a vote on whether to call a general election following shortly after.

While the bill to delay Brexit looks set to pass, Johnson’s call for a general election is unlikely to secure the 2/3rds of the votes needed.

This may add to the recent optimism surrounding GBP, helping to extend Sterling’s recent recovery.

How Might the BoC’s Rate Decision Impact the Canadian Dollar (CAD)?

CAS investors will be focused on the Bank of Canada (BoC) this afternoon as the bank deliver its first rate decision in two months – a veritable lifetime given the blistering pace of economic developments this year.

Since the BoC’s last rate decision we have seen the Federal Reserve deliver its first rate cut in a decade, while fears of a global recession have surged following an inversion of the US bond yield curve.

In spite of this the BoC is widely expected to stay the course this month, leaving interest rates on hold at 1.75%.

However analysts suggest the BoC will join the easing club sooner rather than later, with the Canadian Dollar potentially losing ground this afternoon if the bank acknowledges economic headwinds could facilitate the need for rate cut in the final months of 2019.