The pound to Canadian dollar exchange rate has seen a big twist and turn lately as the market struggles to price into expectations the changes in sentiment towards both the Canadian dollar and the pound. The Canadian dollar has risen as investors feel a stronger and higher price of oil will boost the Canadian economy in the longer-term.
The pound has also struggled as investors step back from the high expectations that have been placed into the market relating to interest rates. The general belief is that the Bank of England will raise interest rates in the future but we could see the pound falling further should the BoE signal that further hikes after May are now less likely.
Other areas of importance on the GBPCAD rate are the NAFTA (North America Free Trade Agreement) talks where Donald Trump’s views on trade with Canada bear weight. The general impression has been that the talks would prove fruitful which will ultimately see the Canadian dollar perform better as investors have more reasons to believe in the strength of its strong trading relationship with the USA.
Wednesday evening sees Stephan Poloz, Governor of the Bank of Canada give a speech on monetary policy. There have been expectations that the BoC would raise interest rates further in the future, this would see the Loonie dollar gain further. GBPCAD could have a busier end to the week with UK GDP data released on Friday too.
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