This 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 for the past month.
|Currency Pair||% Change||Difference on £200,000|
This week is vital for the Canadian dollar as we get fresh news as to the likelihood of a further interest rate hike. We have seen already two hikes this year and whilst another on Wednesday’s interest rate decision seems unlikely to take place, investors will be taking cues from the commentary that follows. A hike had been loosely priced in by investors but Friday’s worse than expected Inflation data removes that need for now. Inflation increased to 1.6% on Friday but this was below the 1.7% forecast. Interestingly, petrol prices in Canada jumped 14% over a 12 month period, this in relation to Hurricane Harvey disruption. Such a sharp jump could see other negative knock-on effects such as lower consumer spending as Canadians spending power decreased.
The Interest rate decision is at 15.00 Wednesday but the Press Conference from the Bank of Canada at 16.15 and statement by the BoC Governor, Stephan Poloz at 18.15 could prove more interesting. Despite the weakness we have seen since Friday, I would be backing the Loonie for further gains this week. Continued inflationary pressures should I feel lead to Poloz and his team hinting at further rate hikes down the line.
If you have a transfer buying Canadian dollars with pounds the current spike could be worth capitalising on as I believe GBPCAD could be heading for 1.60 or lower. In part this is because I believe it unlikely the Bank of England will raise interest rates or that if they do the hike will be so tentative, the market will be disappointed. Plus all of the Brexit pressures for the UK are not going to go away soon and I feel will unsettle GBPCAD rates in the future.
Back to the Loonie and with a central bank on path to raising rates I think the Canadian dollar will strengthen further longer term. Combined with its biggest trading partner, the US, who is also on a path to hiking rates with a very strong economy, surely this will only see GBPCAD sliding further to 1.60 or below sooner than later.
With a very busy week ahead for the Pound and Canadian dollar, if you have any exchanges to consider please speak to us to make sure you are fully up to date with this developing trend. Feel free to get in touch on 01494 725 353 to discuss any upcoming transfers you have.
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Excellent initial guidance, and during the transaction regular communication and updates. Dealing with Jonathan Watson was a pleasure. Very reassuring.
Jonathan Watson provided very helpful advice throughout the process, as well as immediate responses to our inquiries. He and his team were patient and thoroughly professional, which helped us through some stressful moments following the sale of our property in France.