Pound Sterling to Euro (GBP/EUR), Canadian Dollar (GBP/CAD) and Australian Dollar (GBP/AUD) Exchange Rate Forecast: Will BOC Cut Rates? Aussie Confidence Sinks
The Pound Sterling to Euro (GBP/EUR) exchange rate recorded gains in the first half of Wednesday’s European session while the Pound Sterling to Canadian Dollar (GBP/CAD) and Pound Sterling to Australian Dollar (GBP/AUD) exchange rates remained in a narrow range ahead of hefty data releases.
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The Bank of Canada (BOC) is expected to announce its latest interest rate decision on Wednesday, an event that could see the ‘Loonie’ swing. The BOC recently cut rates from 1.0% to 0.75% in January, a move that shocked markets and sent the Canadian Dollar exchange rate tumbling.
Bank of Canada Rate Cut Forecast to Send ‘Loonie’ Exchange Rate Lower
Many investors are betting on a rate cut this year, with economist Avery Shenfield suggesting that ‘the real odds are much less certain either way.’
Shenfield continued: ‘Our 1.7% real GDP [Gross Domestic Product] forecast for the year will likely sit below the bank’s revised projections, creating room for a Governor who likes to fine-tune to justify another move. But there’s a fine margin of error in that GDP call, and an extra couple of decimal places in growth could stay in the BOC’s hand.’
Meanwhile, the Australian Dollar softened on account of weaker-than-forecast Chinese Industrial Production figures giving investors cold feet on account of forecasts for lesser demand in Australia’s largest export, iron ore.
Iron ore prices are likely to take a tumble as investors anticipate weaker Chinese growth and an excess of the product in the market.
Westpac’s Australian Confidence Slip Disappoints – ‘Aussie’ Exchange Rate Softens
Additionally, the ‘Aussie’ tumbled in the Australasian session as Westpac’s Consumer Confidence Index took a hefty -3.2% decline from 99.5 to 96.2 in April.
Westpac’s chief economist Bill Evans commented: ‘This is a disappointing result. We must recognise that confidence is again looking vulnerable heading into the Budget announcement next month. Indeed, recognition that the next Budget is imminent may have contributed to this month’s weakening in confidence.’
Thursday could be another major day for Australian Dollar movement with the release of Australian Consumer Inflation, Unemployment Rate and Employment Change stats.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast
The Euro is also under pressure on Wednesday as investors eagerly await the European Central Bank’s (ECB) interest rate announcement and follow-up press conference. Any hawkish comments by ECB President Mario Draghi could substantially bolster the Euro exchange rate at a time when negotiations with Greece are seemingly limp.
The Pound is no stranger to political influence with the upcoming May general election threatening to tip Sterling at any moment. As speculation regarding the election continues to mount, the Pound becomes increasingly susceptible to political debate.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is reaching 1.8459. The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is trading at 1.9385; the Pound Sterling to Euro (GBP/EUR) exchange rate is trending in the region of 1.3893.