December 16, 2021 - Written by John Cameron
STORY LINK Pound Canadian Dollar Exchange Rate News: GBP/CAD Rangebound as Investors Await BoE Interest Rate Decision
GBP/CAD Trading in Narrow Range Ahead of BoE Announcement
The Pound to Canadian Dollar (GBP/CAD) exchange rate is subdued this morning as investors wait for Bank of England’s (BoE) interest rate announcement at noon.
At the time of writing, the GBP/CAD exchange rate is trading at approximately $1.7008 with minimal market movement.
Pound (GBP) Muted as BoE Set to Declare Interest Rates
The Pound (GBP) began today’s session by edging slightly downward against the Canadian Dollar (CAD) as investors await Bank of England’s (BoE) interest rate decision at noon.
At present, BoE is expected to leave interest rates unchanged at 0.1% despite the decade-high inflation pressuring policymakers to take action.
However, the current Omicron situation continues to provide uncertainties for the global economy, which is likely to influence BoE policymakers’ decision.
Silvia Dall’Angelo, senior economist at the International Business of Federated Hermes, said:
‘The Bank could well use few more weeks to get more clarity about Omicron’s implications for the outlook and to see whether the recently adopted government’s measures are sufficient to contain its fast rise in the country.
‘Overall, it makes sense for the Bank of England to keep rates on hold at its upcoming meeting, avoiding rattling markets just before the liquidity-light holiday period.
‘The February meeting – including a full reassessment of the outlook and a press conference to explain the rational underpinning a policy change – seems to offer the MPC a more appropriate set-up for rates lift-off.’
Moreover, the UK’s manufacturing and services PMIs underperformed in December placing further pressure on GBP.
The manufacturing PMI printed at 57.6, down from the previous 58.1 which is three-month-low but in line with market expectations.
Services PMI printed much lower than the forecast 57 plunging from 58.5 to 53.2.
Canadian Dollar (CAD) Edges Higher As Oil Prices Improve
At the same time, the Canadian Dollar (CAD) is trending slightly higher against the Pound (GBP) as oil prices increase.
The commodity-linked ‘Loonie’ is benefitting from improving WTI oil prices at the beginning of today’s session.
Elsewhere, the Canadian government’s advice against all non-essential trips in a bid to tackle the rising Omicron cases, is limiting the ‘Loonie’s upside potential.
The Canadian Health Minister, Jean-Yves Duclos, has said:
‘Our government is officially advising Canadians to avoid non-essential travel outside Canada.
‘Those who are planning to travel, I say very clearly: Now is not the time to travel. The rapid spread of the Covid variant on the global scale makes us fear the worst.
‘Travelling Canadians could contract the virus or get stranded abroad.’
Prime Minister, Justin Trudeau, has sympathised, acknowledging that the situation ‘sucks’, however has reiterated that the guidelines of wearing masks and being fully vaccinated are in place for everyone’s safety.
However, the travel and hospitality industries are likely to struggle as citizens shy away from going on holidays. This may place further pressure on CAD’s potential.
GBP/CAD Exchange Rate Forecast: BoE Interest Rate Decision in Spotlight
Looking ahead, the Pound Canadian Dollar exchange rate is likely to be dominated by the Bank of England’s interest rate decision which it is published at noon today.
Further influence for Sterling is likely to come from ongoing issues such as Omicron cases and Brexit negotiations.
Meanwhile, with a lack of Canadian data scheduled for today, the Canadian Dollar (CAD) is likely to be impacted by oil prices as well as rising Omicron cases.
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TAGS: Pound Canadian Dollar Forecasts