GBP/CAD broke through its recent lows of 1.59 following the BoC interest rate decision on Wednesday. Whilst a decision was made to keep interest rates on hold, sluggish exports within the economy are becoming a concern.

This in turn has resulted in the Bank of Canada cutting its growth forecasts for 2018, and GDP estimates from 2.2% down to 2% for 2017.

But there was extra news from the Bank which has resulted in further weakness for CAD.

BoC hints at further interest rate cuts

Bank of Canada Governor Stephen Poloz has acknowledged that policymakers came close to tipping point on an interest rate cut on Wednesday. Given the concerns surrounding the country’s exports a weakening of CAD could help to put its exports back on equal footing.

In the context of GBP/CAD exchange rates, Sterling has gained neatly 4-cents against the Canadian Dollar since Wednesday, providing clients with an estimated $8000 more on a £200,000 sell off.

Planning ahead of your currency transfer

Further interest rate cuts coupled with lower oil prices tend to work in Sterling’s favour under normal market conditions. However, with Theresa May set to invoke Article 50 within the next 5 months I am not expecting Sterling to recoup its post-Brexit losses for some time.

Whilst it remains true that a BoC interest rate cut could benefit Sterling, exchange rates could be in much less favourable conditions when the Bank decides to act so if you are looking to by CAD in the next 3-6 months, or are currently waiting on funds, a forward contact option could mitigate further losses in the event May invokes Article 50 earlier than expected.

With the news over the weekend that British banks are planning to relocate after Christmas following the Brexit vote, I would not be surprised to see some Sterling weakness once the markets open this morning. Get in touch with us sooner rather than later if you would like to benefit from this recent spike in the market.

Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.