Pound to Canadian Dollar (GBP/CAD) Exchange Rate Rises as BoC Holds Interest Rates

October 28, 2020 - Written by John Cameron

STORY LINK Pound to Canadian Dollar (GBP/CAD) Exchange Rate Rises as BoC Holds Interest Rates

GBP/CAD Exchange Rate Rises as Oil Prices Drop

The Pound to Canadian Dollar (GBP/CAD) exchange rate rose by 0.4% today, with the pairing currently trading around CA$1.727.

The Canadian Dollar (CAD) fell today after the Bank of Canada (BoC) announced that its interest rate would remain at 0.25%.

Tiff Macklem, the Governor of the BoC, was downbeat in his statement, however, saying:

‘The gap between the actual output and the potential output of the economy isn’t expected to close until 2023, with some sectors and workers disproportionately affected by the virus.’

With Canada’s second wave expected to hit the nation’s near-term growth, Canadian Dollar investors are remaining generally cautious.

Meanwhile, the commodity-linked ‘Loonie’ has also suffered from a dip in oil prices, with US crude falling down over 3% at around $38.25 per barrel.

Stephen Innes, an analyst at Axi, commented:

‘The return of the “Sudden Stop” economic nightmare will play a considerable role in the market’s mindscapes over the next few weeks even if Macron and Merkel don’t introduce national lockdowns.

‘As far as international travel, you can write this year’s holiday season off as no one is going to take the chance of getting stranded anywhere in a nationwide lockdown.’

Pound (GBP) Rises as UK-EU Brexit Talks Intensify in Brussels

The Pound (GBP) rose today as Brexit talks between the UK and the EU continue, moving from London to Brussels as debates ‘intensify’ between the two parties.

Ireland’s Foreign Minister Simon Coveney was optimistic, saying that he expects a post-Brexit trade deal to emerge in just two weeks, but warned that ‘it won’t be easy’.

Director-General of the CBI, Dame Carolyn Fairbairn, bemoaned the slow progress but was optimistic that the UK would secure a post-Brexit trade deal in the end.

Fairbairn commented:

‘The thing that’s painful is that it has taken so long to get to a resolution. I think we will get a deal. The remaining issues look soluble.’

However, GBP remains generally subdued owing to cautious optimism surrounding UK-EU Brexit progress.

Meanwhile, Sterling’s gains are being held back by growing calls for a nationwide lockdown as the Covid-19 infection rate soars throughout Britain.

As a result, Pound investors are fast becoming more worried that the British economy could face another serious setback in the months ahead.

GBP/CAD Outlook: Sterling Could Skyrocket on Brexit Deal

Canadian Dollar (CAD) investors will be looking ahead to tomorrow’s release of September’s Canadian Building Permits figure.

Any improvement in Canada’s economy would prove CAD-positive.

Meanwhile, oil prices will also dictate the direction of the ‘Loonie’. If these continue to fall, however, the CAD/GBP exchange rate will suffer.

Pound (GBP) traders will be eyeing tomorrow’s publication of the latest UK Mortgage Approvals for September.

The GBP/CAD exchange rate could skyrocket, however, if UK-EU Brexit talks converge on a post-Brexit trade deal.

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TAGS: Canadian Dollar Forecasts Pound Canadian Dollar Forecasts