Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Rallies after BOC Holds Rates
Some of the strength has left the Canadian Dollar (CAD) on Thursday morning as oil prices struggle to maintain a bullish run, in spite of the Bank of Canada’s (BOC) decision to leave interest rates unchanged. Demand for the Pound (GBP) has improved in the wake of the latest RICS House Price Balance, with the strength of the UK housing market helping to reassure investors. As a result the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate has been trending higher in the region of 1.8851.
Ahead of the Bank of Canada’s (BOC) latest policy meeting the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is on a narrow downtrend, in spite of positive UK data.
‘Brexit’ Worries Continue to Dominate Pound Sterling (GBP) Exchange Rate Outlook
Weaker-than-expected BRC Like-For-Like Sales and comments from Bank of England (BoE) Governor Mark Carney during a parliamentary committee did little to improve the appeal of Pound Sterling (GBP) yesterday. As Carney acknowledged that the ‘Brexit’ issue poses a significant downside threat to the UK economy, in the short term at least, the Pound slumped sharply against rivals. With the outlook of the domestic economy expected to remain muted ahead of June’s referendum, investors continue to lack sufficient incentive to favour the softened currency.
The Canadian Dollar (CAD), meanwhile, continued to benefit from a recovery in oil prices, with Brent crude having broken back above the $40 per barrel mark. However, as weak Chinese trade data suggested that the current oversupply glut is unlikely to diminish in the near future and Canadian Building Starts declined sharply in January the ‘Loonie’ struggled to hold onto its gains for long.
Strengthening UK Industrial Production Fails to Bolster Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Today
Improved UK Industrial and Manufacturing Production figures inspired an uptick for the Pound this morning, as negative market sentiment and global slowdown pressures failed to significantly weigh on production at the start of the year. Nevertheless, this was not enough to rescue the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate from its current downtrend, as February’s data is expected to show a reversal in this improvement.
Confidence in the ‘Loonie’ is somewhat limited ahead of this afternoon’s Bank of Canada (BOC) policy meeting, with some traders concerned that policymakers could elect to lower interest rates at this juncture. Given recent comments from BOC officials this would still seem to be an unlikely outcome, allowing the Canadian Dollar to remain on a narrow uptrend against its rival today.
GBP/CAD Exchange Rate Forecast: BOC Rate Decision Predicted to Provoke Canadian Dollar Volatility
Providing the BOC opt to leave interest rates unchanged at the March meeting the GBP/CAD exchange rate is expected to weaken further, with the appeal of the Canadian Dollar bolstered by any signs of greater confidence in the outlook of the domestic economy. A more dovish hold could well diminish the strength of the ‘Loonie’ on the other hand, particularly as oil prices have begun to slip back.
The Pound will be hoping to achieve a stronger rally on the back of the latest NIESR Gross Domestic Product Estimate. If growth estimates fail to push higher the UK’s economic health is likely to be called back into question, provoking a further weakening of the more vulnerable Pound.
Current GBP, CAD Exchange Rates
At the time of writing, the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate was on a narrow downtrend at 1.9046, while the Canadian Dollar to Pound Sterling (CAD/GBP) pairing was making gains around 0.5245.