GBP/CAD was the focus pairing for the Canadian Dollar today. We are still waiting for the US interest rate decision on Thursday, but there are no new indicators on the probability for this decision, at least none which are obvious enough to affect USD/CAD rates currently.
Today inflation data for the UK economy was released which came in as expected, but still disappointingly low. Inflation for August were stable at 0.0%, but being on the precipice of deflation is doing little to help the value of the Pound. Canadian inflation figures will be released on Friday, with expectations of a similar result. However, this is only due to last minute dips in oil prices for last month. Canada is forecasted to have a 1.3% inflation rate for the year, not too far off the target for a healthy economy at 2% and much higher than the UK.
GBP/CAD as a result has fallen from this news with a weakening Pound, and rates have moved back into the 2.03’s.
Tomorrow Eurozone inflation figures will be released, so EUR/CAD will likely undergo similar volatility.
GBP/CAD will most probably lower off the back of an interest rate hike, with the Canadian Dollar strengthening due to its close association with the US economy. Personally, I think there is a less then 50% chance of a rate hike this month. While markets seem to be pricing this in to the value of the CAD and the USD, the FED have proved dovish in this area before, and analysts at institutions like Goldman Sachs feel the hike is more likely to be in December.
What is causing my hesitancy however, is that there is an election cycle in play, and politicians are pushing to raise rates in a bid to brag about their economic management.
Should the hike come in, seeing as markets have been waiting since the 2007/8 financial crisis for the event, the amount of movement on the markets will be monumental. GBP/CAD will tumble by a factor of whole cents and not just decimal places. Should a delay be announced, rates may move up slightly, but to nowhere near the same degree.
Anyone with a GBP/CAD requirement should be looking to move soon ahead of the event. Otherwise, the next period which could help your transfer will be the Canadian election. The weakness for CAD in the run-up to the election, however, the uncertainty remains as to whether this will make up for any potential ground lost on Thursday.
GBP/CAD is still at multi-yeah highs. Contact me on [email protected] if you’d like a free quote on your transfer and my personal opinion on your situation.