Pound Canadian Dollar (GBP/CAD) Exchange Rate Edges up as UK Inflation Falls to BoE’s Target
The Pound Sterling Canadian Dollar (GBP/CAD) exchange rate rose and the pairing is currently trading at an inter-bank rate of CA$1.6840.
On Wednesday morning data revealed that UK inflation had cooled in May, and fell back to the Bank of England’s (BoE) target.
The data showed consumer prices rose at an annualised rate of 2%, which may reassure the BoE that there is no urgency to raise interest rates.
Senior Economist at CEBR thinktank, Josie Dent believes inflation will continue to hover around the 2% mark over the coming months, and added:
‘Inflation fell back to the BoE’s target rate this morning, as the Monetary Policy Committee meets today to make a final decision on interest rates.
‘Looking ahead, CEBR forecasts CPIH inflation will average 2.0% in 2019 as upward pressures from higher energy prices and the strong labour market are offset by weak demand, demonstrated by the negative economic growth recorded in April.’
However, the data also suggested that price pressures remained muted.
This added to the concerns the UK will crash out of the EU without a deal if front-runner Boris Johnson becomes the next Prime Minister left the Pound muted against the Canadian Dollar.
US-China Trade Talks Set to Continue Ahead of G20
The Canadian Dollar edged up following the announcement that US-China trade talks were scheduled to resume.
The ‘Loonie’ was likely provided an upswing of support as Chinese state media, Xinhua revealed Chinese President Xi Jinping said he was prepared to meet President Trump in Japan.
This likely saw an upswing in support for CAD, as risk-appetite increased.
US President Donald Trump revealed that talks were set to resume ahead of next week’s G20 summit in Japan, and in a tweet he wrote:
‘Had a very good telephone conversation with President Xi of China. We will be having an extended meeting next week at the G-20 in Japan. Our respective teams will begin talks prior to our meeting.’
However, this could do little on Wednesday prevent the Canadian Dollar falling against Sterling.
Pound Canadian Dollar Outlook: Will Disappointing Canadian Inflation Weigh on CAD?
Looking ahead to this afternoon, the Canadian Dollar (CAD) could fall against the Pound (GBP) following the release of Canadian inflation data.
If the Bank of Canada’s (BoC) Consumer Price Index (CPI) does not rise as high as forecast, it could dampen sentiment in the ‘Loonie’.
Meanwhile, on Thursday Sterling could slump following the release of the Bank of England’s (BoE) interest rate decision and meeting minutes.
While markets expect the bank will leave rates unchanged, if the tone of the minutes is overly dovish it could cause the Pound Canadian Dollar (GBP/CAD) exchange rate to fall.