The Canadian Dollar hit its lowest level against the Pound in almost 4 weeks yesterday after positive Brexit comments from Brexit Secretary Dominic Raab helped to boost the value of the Pound. To put these movements into monetary terms, a 200,000 CAD purchase is now over £4,000 less expensive now compared to just over a week ago.

Currency Pair% Change in 1 monthDifference on £200,000
GBPCAD3.7%$12,270 CAD
Stephen Poloz suggests more Interest Rate hikes are to be expected

This was despite positive commentary from Bank of Canada Governor Stephen Poloz regarding its plans on continuing to raise Interest Rates from the current levels of 1.75%, during a speech on Monday. Poloz suggested that the Central Bank would gradually raise rates to somewhere between 2.5% and 3.5%, however gave no indication as to when these hikes would take place.

The agreement on the United States – Mexico - Canada trade agreement had bought a new wave of relief to Canada, and that the Central Banks projections for Growth and Inflation go hand in hand with raising Interest Rates, to stop Inflation from climbing too high. The next Interest Rate decision will take place on 5th December, however any hints towards a hike at this meeting between now and then could help the Canadian Dollar to strengthen.

Falling price of oil helps to keep the CAD low

Another factor keeping the Canadian dollar’s value down is the lower price of oil since the news of the US granting exceptions on Iranian oil exports. This has meant that global oil supply will increase, therefore reducing its value, something which the Canadian dollar is directly correlated to, due to it being Canada’s largest export.

This afternoon at 3pm, the Ivey Purchasing Managers Index will be released and is set to show an improvement for business conditions in October compared to September. Asides from this, Canadian economic data is light for the rest of this week and therefore I would expect Brexit to continue to be the main driver for GBP/CAD exchange rates.

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