Bank of England Interest Rate Decision – how could this impact GBPCAD rates?

GBP/CAD -Despite the anticipated rate hike by the Bank of England (BOE) Sterling has suffered against the Canadian Dollar. Investors are reluctant to move to the Pound due to the lack of clarity surrounding Brexit and the possibility of a “no deal” scenario.

It is expected that the BOE will raise interest rates today, although personally I do not think it is warranted. There has been poor data in several areas including average wage growth and retail sales. Unemployment has been lauded as some of the best levels for over forty years, but the data includes zero hour contracts which is not a stable form of employment.

The market moves on rumour as well as fact so be wary of thinking Sterling will shoot up in value following a hike. The hike could well be factored in to current exchange rates. The danger is if there is no hike at all.

I think the hike will go ahead but the market mover will be Mark Carney’s speech following the decision. He will discuss monetary policy moving forward and I expect a dovish tone and an indication that a further rate hike will be a lot further down the line. If this does occur you can expect the Pound to lose ground potential breaking into the 1.60’s against the Canadian Dollar.

For more information on how the decision from the BoE could impact GBPCAD exchange rates one way or another, feel free to get in touch using [email protected].

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