Tomorrow afternoon the latest interest rate decision will be released by the Bank of Canada, the expectation that there will not be a change to the rate. In July at the last meeting the Monetary Policy Committee raised rates by 0.25% from 0.5% to 0.75%. This was well received by investors and the Canadian Dollar has gained significant ground since.
Coupled with the interest rate hike the price of oil has also been a major factor into the Canadian Dollars strength. Hurricane Harvey in Texas has taken one of the United States biggest productions offline which has lowered the amount of oil being produced. In a over supplied market this has forced the wholesale price of oil to lift, meaning Canada’s largest export is able to turn a larger profit.
Some of the immediate strength in my opinion is therefore potentially going to be short lived. Oil production levels are already being contained so it wont be long before the amount of barrels being produced is back up to the previous level. With this in mind I believe we could see the GBP/CAD move back towards the 1.65 level which in my opinion would mean anybody looking to sell the Canadian Dollar should do so whilst the currency is at a peak.
The Bank of Canada could however be optimistic of further rate hikes tomorrow. The United States have completed three so far this year and I wouldn’t be surprised if the Bank of Canada might follow suit.
If you do have a question with regards to my forecast please get in touch. When you come to moving large sums of money a movement of a cent can often relate to a significant difference in your returns. Helping you formulate a strategy could make sure you’re in the best position to exchange currency when the market is in your favour, please contact me at [email protected]