Canadian Dollar Boosted on Bank of Canada Outlook

Pound Stronger vs Canadian Dollar this Morning

The Canadian dollar has received a boost after Bank of Canada governor Stephen Poloz hinted at further interest rate increases after he said that wage growth is forecast to start rising which would be seen as good for the Canadian economy. However he highlighted that the ongoing NAFTA negotiations are holding back the Bank of Canada from making any sudden decisions as uncertainty still remains.

There is some hope that a deal will be arranged and there is pressure from Mexico to have this wrapped up sooner rather than later ahead of elections in the summer. In my view if an agreement can be reached then this should bode very well for the Canadian dollar and the currency should make some material gains on a good deal. Clients looking to sell Canadian dollars are seeing some much better opportunities and there may be some more mileage in this rally.


The pound has fallen sharply against the Canadian dollar with rates falling well below the 1.80 threshold for the GBP CAD pair. The sudden drop followed weaker than expected Consumer Price Index inflation data for the UK which saw inflation fall to 2.5% in March down from 2.7% in February. Whilst the numbers are not especially worrying it does raise question marks as to whether or not the Bank of England will in fact raise interest rates at the next policy meeting in May.

Until the now the markets had largely priced in the prospect of a 0.25% interest rate increase. However this seems less likely and the vote by the Monetary Policy Committee may be closer than initially expected which could see interest rates remaining on hold for a while longer and keeping the pound under some pressure.

For more information on the Canadian dollar and how these events may impact on your own requirement then please get in touch with me at [email protected]