Pound (GBP) Bearish in advance of BoE Rate Decision
The Pound (GBP) has been trading cautiously ahead of the Bank of England’s (BoE) December rate decision and meeting minutes, with markets uncertain as to the level of dovishness that policymakers may display. While an interest rate move is not expected any increase in the number of votes for a hike will likely bolster Sterling across the board. However, at present, the GBP/CAD exchange rate was trending bearishly in the region of 2.0563.
Earlier…
Sentiment towards the Canadian Dollar (CAD) has remained muted on Wednesday in spite of oil prices having climbed away from a six-year low.
GBP/CAD Exchange Rate Shored up as Brent Crude Hit Six-Year Low
The recent failure of the Organisation of the Petroleum Exporting Countries (OPEC) to agree a lower cap on member states’ oil production has seen the price of crude continue to slide this week, with the global supply glut unlikely to ease as fresh oil pours onto the market. Brent crude consequently dipped below the $40 mark for the first time in six years yesterday, dragged lower as weak Chinese exports suggested that the world’s second largest economy was still slowing. Thus, in spite of the latest Canadian Housing Starts and Building Permits figures both proving stronger than expected, the ‘Loonie’ (CAD) has seen a decided slump.
While the UK’s October Manufacturing Production printed at a weaker level than pundits had anticipated, any Pound (GBP) bearishness was largely counteracted by the market risk aversion that weighed on commodity-correlated currencies throughout the day. However, the afternoon saw the NIESR Gross Domestic Product Estimate for November revised up from 0.5% to 0.6%, painting a slightly less grim picture of the domestic economy.
Canadian Dollar Currency News: CAD Struggles to Make Gains Despite Oil Price Recovery
Oil and commodity prices have recovered somewhat on Wednesday, however, following the latest Chinese Consumer Price Index. Printing higher than forecast, the inflationary gauge jumped from 1.3% to 1.5% in November, offering some respite from the more bearish domestic data seen recently and helping to dispel some of traders risk aversion. Nevertheless, the outlook of crude does not seem especially optimistic, prompting predictions that prices could well slide closer to $20 in the next year. As such, with the odds of an imminent Fed interest rate rise still on the up, the Canadian Dollar has remained out of favour today.
GBP/CAD Exchange Rate Forecast: BoE Hawkishness Could Bolster Pound Further
Tomorrow’s Bank of England (BoE) rate decision is likely to provoke further volatility for the Pound, as pundits hope for a more hawkish set of meeting minutes and any suggestions that policymakers are edging closer to a decision to raise interest rates. Should the BoE demonstrate persistent dovishness Sterling could see a more significant decrease in demand, particularly as the October Visible Trade Balance is expected to show a widening of the domestic deficit.
Although no change is predicted on the October Canadian New Housing Price Index the ‘Loonie’ is not expected to rally, as global pressures continue to weigh on the softened currency.
Current GBP, CAD Exchange Rates
At time of writing, the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate was on a strong uptrend around 2.0524, while the Canadian Dollar to Pound Sterling (CAD/GBP) pairing slumped in the range of 0.4867.
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