GBP/CAD Softens Ahead of BoE Announcement
While traders believe the outcome of the Bank of England (BoE) rate decision today is almost certainly going to show no change in monetary policy, the accompanying minutes are eagerly awaited. It is hoped that the Monetary Policy Committee (MPC) will drop hints regarding the potential for future rate hikes, giving traders an idea of when to expect a stronger Pound.
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Pound Sterling (GBP) has been able to make significant gains on the Canadian Dollar (CAD) as the oil market reels from news that Middle Eastern producers will continuing pumping at their current rate. As a result the ‘Loonie’ (CAD) is slumping in the face of a Pound which is bullish across the board.
GBP/CAD Exchange Rate News: Pound Sterling Advances Ahead of BoE Interest Rate Meeting
While the chances of the Bank of England (BoE) making any changes to the interest rate or their asset purchasing target are slim, traders are still paying attention to the outcome of tomorrow’s meeting. Of more interest than the actual headline figures will be the accompanying minutes, which could signpost the intentions of Monetary Policy Committee (MPC) members. Any hints regarding the timescale and pace of future interest rate hikes will help give traders more direction and could see activity return to a Pound that has been kept weak ever since the dovish ‘Super Thursday’ decision and inflation report.
Pound Sterling is currently bullish against the majority of currencies, making significant advances of 0.8% against the Canadian Dollar (CAD), 1% against the Australian Dollar (AUD) and the New Zealand Dollar (NZD) and 1.1% against currencies including the US Dollar (USD) and the Indian Rupee (INR).
CAD/GBP Exchange Rate Forecast: OPEC Decision Casts Doubts on Future of Canadian Economy
The Canadian Dollar has remained soft against Pound Sterling since Friday’s meeting of the Organization of Petroleum Exporting Countries (OPEC). Saudi Arabia had signalled that they intended to lower production, proposing a 1 million barrel per day (bpd) cut. No country wanted to cut production without other members agreeing to it and countries such as Iran, which has had its exports limited by Western sanctions, have refused to decrease production. As a result of the OPEC meeting the output ceiling was increased, causing oil to slip below the key $40 per barrel mark, with Brent Crude hitting a level not seen since the beginning of 2009.
According to the OPEC press release, ‘The Conference observed that global economic growth is currently at 3.1% in 2015 and is forecast to expand by 3.4% next year. In terms of supply and demand, it was noted that non-OPEC supply is expected to contract in 2016, while global demand is anticipated to expand again by 1.3 mb/d.’
The decision has long term implications for the ‘Loonie’, with fears of a price crash and Goldman Sachs forecasting a drop to US$20 threatening to cause divides in the Canadian economy as resource-producing regions begin to feel the strain.
The CAD/GBP exchange rate is currently trending between 0.4852 and 0.4905.
GBP/CAD Exchange Rate Forecast: Trader Focus on Bank of England
The Bank of England meeting tomorrow is expected to produce no change in monetary stance, while the accompanying minutes could give a better idea of the path future interest rate rises will take. A rate hold will likely help the Pound to remain strong, with only the Canadian New Housing Price Index due out to provide the ‘Loonie’ any strength.
The GBP/CAD exchange rate is currently trading between 2.0362 and 2.0600.