After having a good run the Canadian Dollar has started to fall against the Pound after an interest rate hike in Canada appears now to be less likely. Bank of Canada governor Stephen Poloz has suggested that any rate hike may not be coming in the near future.
Canadian inflation is currently close to a three year high at the moment and as high inflation is one of the key responsibilities for a central bank this would typically put pressure on a bank to consider raising interest rates.
However, Poloz put paid to rumours of a rate hike by saying that although he expects inflation to remain above 2% the current levels are not too much of a concern.
The Pound has once again rallied towards 1.80 and I would not be surprised to see this figure break through during the course of this week providing better opportunities to buy Canadian Dollars at a higher rate at the moment.
Meanwhile turning the focus back to what is happening in the UK it appears as though the Bank of England may be gearing up for an interest rate hike to come in the future.
With the Bank of England due to meet on 10th May we could see another rate hike coming according to MPC member Michael Saunders who was one of the two who voted for a rate hike at the previous meeting.
Average Earnings have now surpassed inflation and with UK unemployment close to its lowest level on record the central bank have enough evidence to hike rates but the question is whether we’ll see one in the next fortnight. If we see a rate hike or support in favour of hiking rates soon then I think we will see the Pound continue to make gains vs the Canadian Dollar.
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