GBP/CAD Exchange Rate Holds Steady in Anticipation of the BoE Rate Verdict
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate fell to a low of 1.7906 on Wednesday as the Bank of Canada (BOC) delivered its interest rate decision.
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The Bank of Canada opted to leave the benchmark interest rate on hold at 1.0% – as predicted by the majority of economists.
The central bank commented that inflation is close to the 2% target, that the Eurozone’s return to growth appears to be faltering and that the situation in Ukraine is acting as a drag on the global economic outlook.
In a statement published by the BOC it was stated; ‘Stronger growth in the second quarter has brought GDP to almost exactly the level the Bank had projected in July’s MPR. Canadian exports surged in the second quarter after a weak winter, supported notably by stronger US investment spending and the past depreciation of the Canadian Dollar.
‘While an increasing number of export sectors appear to be turning the corner toward recovery, this pickup will need to be sustained before it will translate into higher business investment and hiring. Meanwhile, activity in the housing market has been stronger than anticipated. The Bank still expects excess capacity in the economy to be absorbed during the next two years.’
The BOC also asserted that it is maintaining a neutral bias regarding the next change to the policy rate and that the ‘timing and direction’ of any movement will depend on new information.
Prior to the announcement the Canadian Dollar to US Dollar (CAD/USD) exchange rate softened even as higher-risk currencies were supported by speculation surrounding a permanent ceasefire being adopted by Ukraine and Russia.
After the decision the CAD/USD pairing managed to achieve its highest level of the week so far.
The Pound to Canadian Dollar exchange rate reached a high of 1.8006
Yesterday the ‘Loonie’ derived support from the news that the Royal Bank of Canada’s Manufacturing PMI rose from 54.3 to 54.8 in August – pushing further above the 50 mark separating growth from contraction.
The Pound to Canadian Dollar exchange rate failed to advance even as the UK’s own Services PMI report showed improvement.
Today’s Pound Sterling to Canadian Dollar Exchange Rate Forecast
GBP to CAD weakness is likely to persist throughout the rest of the local session.
The pairing could experience modest movement tomorrow following the Bank of England’s interest rate decision, but as the central bank isn’t likely to make any alterations to fiscal policy fluctuations will be slight.
Investors with an interest in the Pound to Canadian Dollar exchange rate are more likely to be focusing on Canada’s upcoming employment data.
The figures are due out on Friday and may show that Canada added 9,500 positions in August, leaving the unemployment rate at 7.0%.
The Pound to Canadian Dollar (GBP/CAD) exchange rate is currently trending in the region of 1.7903.
The Pound Sterling to Canadian Dollar exchange rate is currently trending in the region of 1.7926.
With only one Canadian domestic data publication of little significance due on Thursday, ‘Loonie’ (CAD) changes are likely to be dictated by foreign currency movement and geopolitical developments.
In anticipation of the Bank of England interest rate decision due later in the day, traders have held off from buying into Sterling. Although it is unlikely that there will be any major developments or alterations, traders are reluctant to buy into the currency without knowing first the direction policymakers will take.