Sterling gains against the Canadian Dollar following European banking stress tests (Tom Holian)

GBP EUR Exchange Rate: Weekly Review July 16  

Sterling has seen some dramatic gains against the Canadian Dollar overnight following the release of the latest European Banking Authority’s stress tests.

The tests were performed on 51 of the biggest European banks with assets of at least EUR30bn and all four of the major British banks came out well and surpassed the requirements set out for capital buffers.

In effect this shows that the British banks would be okay under extreme stress conditions similar to that of the credit crunch.

The problem banks including those in Italy caused to weaken the Euro and money very quickly flowed into Sterling which caused rates for GBPCAD to go up overnight.

This is good news for anyone looking to buy Canadian Dollars with Sterling but the gains could be short lived when the Bank of England makes it next interest rate announcement on Thursday.

The expectation is for either an interest rate cut or further Quantitative Easing or even both and any change to monetary policy on Thursday could see Sterling’s gains vs the Canadian Dollar quickly eroded.

If you have a currency transfer to make and want to save money on exchange rates compared to using your own bank then contact me directly for a free quote. Tom Holian [email protected]

I look forward to hearing from you.