Canadian Dollar Hits Near Four-Week Low as GBP Climbs to Reverse BoE Rate Cut Bets

The Canadian Dollar hit a near four-week low against the USD on Wednesday after dovish comments from the Bank of Canada (BoC) in a policy announcement prompted investors to raise bets of an interest rate cut from the central bank in the coming months. Meanwhile, GBP has celebrated recent success in its labour market report which released earlier this week. The positive figures helped to support the pound and saw it rise above many of its rivals.

Canadian Dollar loses its resilient status as BoC announce dovish comments about the monetary policies
For the Canadian Dollar, yesterday saw the currency hit a near four-week low against the USD as the BoC announced a dovish series of comments about the monetary policy for Canada. This dovishness prompted the market to raise bets on the chance of an interest rate cut for the BoC in the coming months. The central bank maintained its key overnight interest rate which stands at 1.75% but opened the door to a possible cut should a recent slowdown in the Canadian economic growth persist.

GBP propels after recent labour market figures, sending rate cut bets crashing
GBP has had a positive this week after a couple of week enshrouded in Bank of England interest rate cut bets. The bets have been increasing, key supporters for the raised bets were dovish comments from members of the BoC’s MPC which controls the interest rate at the central bank and recent poor performance in economic data. However, this seems to have been pushed aside as the UK’s labour market report was released earlier this week and surprised many. The report showed an all-time high figure for individuals in employment and expectations being met for wage growth figures also. The positive news has allowed GBP to gain on many of its rivals as they battle with their own central bank uncertainties. The turnaround for GBP couldn’t have come at a better time and now has investors wondering if it will be enough to fend off a BoE rate cut at months-end.

Friday will see the UK’s flash PMI release which will likely support the BoE’s decision concerning their interest rate policy going forward.

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