Pound Sterling Canadian Dollar GBP CAD Exchange Rate Forecast Higher on Inflation Data

October 23, 2015 - Written by John Cameron

STORY LINK Pound Sterling Canadian Dollar GBP CAD Exchange Rate Forecast Higher on Inflation Data

Prospect of ECB Easing Supports Commodity Dollar's including CAD, AUD, NZD

The Pound Sterling Canadian Dollar exchange rate GBP CAD looked likely to plunge back below the two to one threshold in early trading today, but developments on the global and domestic front have triggered a pronounced turnaround.

The Loonie enjoyed a surge of support against the Pound which started yesterday afternoon when the European Central Bank’s President Mario Draghi announced to the world that his Bank’s policymembers would be re-assessing the scope of its ongoing Quantitative Easing programme at their December meeting.

Investors inferred from these words that, given the continued deflation in the eurozone, the euroland’s reserve bank might be about to extend the scope of its Quantitative Easing programme.

The promise of an extension of ultra-loose money from one of the world’s premier central banks helped fuel a surge of support for the Commodity Dollars including the Canadian Dollar.

Forex Alert: PBoC Rate Cut to Support Canadian Dollar Appreciation

The forward move for the Canadian unit was provided with further fuel this afternoon with the announcement from the People’s Bank of China (PBoC) that it was trimming its headline interest rate to a relatively lowly 4.35% with immediate effect.

The PBoC explained the cut of 25 basis points on the fact that the drop in the pace of price rises in China have caused CPI inflation to become out kilter with the nation’s growth rates.

The timing of the PBoC’s announcement – it was made during the middle of the night after Friday’s Shanghai equities market close – alarmed some investors who viewed it as a panic measure. Others viewed it as not sufficiently bold to stop China’s economy from suffering a ‘hard landing’.

GBP to CAD Exchange Rate Hits 2.0260 Today

However, the tentative gains for the Canadian Dollar over the past 24hrs came to an abrupt end this afternoon when September’s official Canadian Consumer Price Index numbers printed at a below-expectations annualised 1.0%.

The news sent the Pound Sterling Canadian Dollar exchange rate up to as high as 2.0260 GBP CAD and analysts forecast that there could be further gains to come.

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TAGS: Canadian Dollar Forecasts Pound Canadian Dollar Forecasts