The Bank of Canada are due to release their latest interest rate decision later today at 15:00 UK time. Interest rates are currently sitting at 1.75% and were last raised in October 2018.

Currency Pair% Change (Month)Difference on £200,000
GBPCAD3.1%$10,140

Expectations are for the BoC to keep rates on hold once again and are likely to keep them on hold for the foreseeable future. However, although I don’t expect much movement to take place when the decision is made I do expect to see a lot of volatility when BoC Governor Stephen Poloz holds the press conference a little later this afternoon.

If he hints that an interest rate hike may come before the end of the year in an attempt to keep up with monetary policy south of the border, then this could see some Canadian dollar strength against a number of different currencies including vs the pound.

However, if he remains relatively dovish this could keep the Canadian from making further advances against the pound.

CAD has been feeding of strength from US Oil sanctions

Oil prices help the Canadian dollar

As oil prices have risen owing to the US’s imposed sanctions on Iranian oil this has helped to strengthen the Canadian dollar as they are a hugely petro-dependent economy and therefore this will often result in Canadian dollar strength.

However, many economists expect this move to be short-lived. During the final quarter of 2018 oil prices fell by 16% which caused a big loss for many commodity based investors and during this time we also saw the pound improving against a weak Canadian dollar.

Since the start of the year oil prices have been increasing and although I think we could still see further rises, this could be short term so if you’re considering buying Canadian dollars then you may wish to consider taking advantage of this latest spike in GBP/CAD exchange rates.

If you have a currency transfer to make involving Canadian dollars then make sure you keep in close contact with your account manager who will keep you updated on market movements.

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