Sterling is under pressure this morning following poor UK inflation data released at 09.30.
The current level is are some way off the government’s target of 2%, which when combined with Bank of England (BoE) Governor Mark Carney’s comments yesterday, has seemingly put the Pound on the back foot.
The BoE had previously alluded to the fact that they may look to raise interest rates in order to try and drive inflation levels down towards 2%, but Carney’s comments yesterday indicated that they would have to review their current interest rate strategy whilst the threat of a no Brexit deal remained.
GBP/CAD levels have dropped over a cent from the high of 1.7345, with the Pound currently trading around 1.7260 against the Loonie.
The CAD has faced its own set of problems of late, with the Canadian economy suffering from a slowdown in global trade. Despite oil prices rising lately, it has seen its value diminish over recent months. Concerns over the NAFTA agreement and president Trump’s trade tariffs have heaped pressure on its commodity based economy, which relies heavily on continued global economic growth to prosper.
Looking ahead it is difficult to dissect which direction the pair will take next. If the BoE do end up raising interest rates in August as the markets had anticipated, then we could see Sterling gain some support. Of course, much will depend on how Brexit talks progress but for the time being, Sterling seems to have found a level of support above 1.70 against the CAD.
Looking at the Canadian economy, any resolution to the current standoff in NAFTA talks, or an upturn in global growth, could also help to support the CAD around its current levels. If you’d like to discuss any of the above information in further detail I’d be happy to assist you, feel free to give me a call on 01494 725 353 or email me here.