Many analysts now believe that we may be nailed on for an interest rate hike over in Canada this afternoon, with the key Bank of Canada interest rate decision due to be released at 3pm BST. The Canadian Dollar report below looks into the potential impact of the interest rate decision from the BoC tomorrow, and the following monetary policy meeting minutes. The table below shows the change in the GBP/CAD during the past week and the difference when transferring £200,000.00 during that time.

Currency Pair% ChangeDifference on £200,000
GBPCAD1.21%CAD $4,210
OPEC back in the spotlight

Expectations are that we will see the Bank of Canada raise their rates to 1.5% from 1.25% after a solid run of economic data suggesting that the Canadian economy has picked up sharply over the past few months.

For those that are not aware an interest rate hike is generally seen as positive for a currency as it makes that currency more attractive to investors, and although we have already seen fairly substantial Canadian Dollar strength it may get a little stronger (more expensive to buy tomorrow afternoon straight after the decision).

This strength could be short lived depending on what comes from the monetary policy statement and just what we see from the press conference 15 minutes later.

BOC Press Conference just as key

What is equally important will be the tone of the Press conference taken by BOC Governor Stephen Poloz, and Deputy Timothy Lane.

Just as much as an actual decision will move the markets the speculation of future rate changes can cause equal volatility. There are many that feel that the interest rate hike may be met by a more dovish or negative tone regarding future rate movements and future fiscal policy.

This is mainly down to slow moving talks between the U.S and Mexico over North American Free Trade Agreement, or NAFTA which is still a slight concern for investors should Trump decide to take the bull by the horns and to cause Canada problems.

On a positive note the Canadian stock market hit a record high yesterday so things are clearly looking fairly positive at present. As long as there are no major problems regarding the NAFTA agreement I can personally see GBP/CAD dropping back below 1.70 in the coming weeks.

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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.