The impact of a US interest rate hike on the Canadian Dollar (Tom Holian)

In just a few hours time the US Federal Reserve are likely to be increasing interest rates for the third and final time this year.

This will be Janet Yellen’s final monetary policy conference before she leaves in February and it would be a major surprise if no rate hike occurs.

The Bank of Canada have kept interest rates on hold on the previous occasion but it may not be too long before they have to look at their own monetary policy in the months ahead.

As Canada trades so heavily with the US this could put pressure on the Bank of Canada going forward so I would not be too surprised to see another interest rate hike in Canada coming early next year.

According to a number of different reports the US Federal Reserve may hike interest rates another three times during 2018 and if Canada tries to copy the same policy or do something similar this could cause a real problem for the Canadian economy.

Indeed, further interest rate hikes in Canada could cause problems for the individual as it means that the cost of borrowing will also rise which could cause debt to increase which inevitably will lead to a slowdown in the Canadian economy.

Therefore, the accompanying statement from the US Federal Reserve could be crucial as to what the Bank of Canada will do going in to next year and therefore what happens to GBPCAD exchange rates in the future.

In the short term the price to exchange Canadian Dollars will also be affected by the ongoing EU summit which is due to take place tomorrow and Friday.

If you’re in the process of either buying or selling Canadian Dollars and would like to be kept updated with what is happening over the next few days then contact me directly for a free quote.

Having worked for one of the UK’s leading currency brokers since 2003 I am confident not only of being able to offer you better exchange rates than using your own bank but also help you with the timing of your trade.

Contact me directly Tom Holian teh@currencies.co.uk and I look forward to hearing from you.