This Canadian Dollar report will examine the factors that could affect exchange rates this week in order to help you stay informed if you need to make a currency transfer. The table below shows the difference you would have received when buying £200,000 at the high compared to the low yesterday.
|Currency Pair||% Change||Difference on £200,000|
It has been an excellent start to the year for those looking to buy Canadian Dollars with Pounds. Despite the potential for an interest rate hike from the Bank of Canada this week, the Pound has managed to gain as much as 3% over the last 2 weeks, making a $200,000 CAD transfer £3,500 cheaper. Ever since Statistics Canada reported Canadian unemployment hit its lowest point in nearly 4 decades back in December, Loonie holders have benefited from impressive gains. It's value began to soar as the likelihood of an interest rate hike to 1.25% became a possibility, potentially making it a very sought after option for investors seeking higher returns on investment. The suggestion actually first surfaced back in October 2017 when the Bank of Canada took quite an aggressive view point with regards to figuring out the next move. GBPCAD slumped to 1.60 back then as the data continued to flow out positively signalling multiple rate hikes might be on the cards.
Last month's unemployment data should be the icing on the cake and this Wednesday’s BoC interest rate decision may well be the time to act. So why is the CAD struggling to gain momentum?
There may well be an argument that the Pound has managed to make consistent inroads against the Loonie because the markets are conscious of how deeply tied the Canadian Dollar is to its exports. Along with the positive unemployment data, impressive GDP figures (as a result of the rise in demand for oil) also formed the basis of the initial argument to raise interest rates multiple times back in October. But the fear is a rise in interest rates will no doubt bolster the value of the Canadian Dollar which in turn threatens the competitiveness of Canadian exports on the international stage. With US president Trump continuing to discredit the value of the North American Free Trade Agreement, the Bank of Canada may well decide with so much potential pressure surrounding Canadian exports just around the corner, it might be best to hold of raising interest rates until the landscape seems clearer.
Governor Poloz did say the BoC are “data dependant” so I wouldn't be surprised to see them follow through on the interest rate hike on Wednesday afternoon. With this in mind, I would be looking to buy Canadian Dollars in the early stages of this week whilst the uncertainty still hovers over the decision.
For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.