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Pound to Canadian Dollar (GBP/CAD) Exchange Rate Falls as the Bank of Canada Leaves Monetary Policy Unchanged

March 11, 2021 - Written by John Cameron

GBP/CAD Exchange Rate Dips Following BoC Rate Statement

The Pound to Canadian Dollar (GBP/CAD) exchange rate fell by -0.2% following yesterday’s interest rate decision from the Bank of Canada (BoC) which saw rates left on hold. The pairing is currently fluctuating around CA$1.75.

Now that the BoC is essentially playing a game of wait-and-see, CAD investors are becoming more cautious about the outlook for the nation’s economy, despite relatively strong indications of growth.

Canada’s central bank stated that the economy was ‘proving to be more resilient than anticipated to the second wave of the virus.’

Analysts James Knightley and Francesco Pesole at ING commented:

‘The unchanged policy message by the BoC prompted a very contained reaction in the Canadian dollar. The Loonie has been the best-performing currency of the G10 dollar bloc in 2021, which has likely been due to a combination of sharply rising oil prices and generally better resilience to setbacks in global risk sentiment.’

Canadian Dollar (CAD) investors will also be awaiting today’s speech from the Bank of Canada’s (BoC) Deputy Governor Lawrence Schembri.

Any downbeat comments about the Canadian economy, however, could drag down the CAD/GBP exchange rate.

Pound (GBP) Sinks as Outlook for UK Economy Begins to Darken

The Pound (GBP) fell against the Canadian Dollar (CAD) today largely owing to a lack of notable UK economic data.

However, Covid-19 infection rates continue to fall, with daily cases down by -459, while those in hospital are down more significantly, at -3,450.

Instead, GBP investors are becoming concerned that several businesses could struggle, with news that supermarket giant Morrison’s profits had fallen by half in 2020.

Added to this, a recent survey has revealed that 74% of British firms have been hit by delays with EU markets.

Consequently, UK markets are becoming more cautious, as the outlook for the nation’s economy remains largely uncertain, especially with complications over Brexit likely to play out in the months and years ahead.

This week also saw Andrew Bailey, the Bank of England’s (BoE) Governor, express uncertainty over whether the economy would ever return to pre-Covid-19 patterns.

Nonetheless, Bailey was basically upbeat, seeing a light at the end of the tunnel because of the UK’s robust rollout of Covid-19 vaccines.

GBP/CAD Exchange Rate Forecast: Could Strong Industrial and Manufacturing Production Boost Sterling?

Canadian Dollar (CAD) investors will be awaiting tomorrow’s publication of February’s Canadian Unemployment Rate report.

Any signs of rising unemployment, however, would drag down the CAD/GBP exchange rate.

If oil prices head higher, then we could see the commodity-linked ‘Loonie’ begin to rise against many of its peers.

Pound (GBP) traders will be eyeing tomorrow’s Manufacturing and Industrial Production figures for January.

The GBP/CAD exchange rate could claw back some of its losses if the outlook for the UK’s economy improves.

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