There appears to be support for the Pound to Canadian Dollar rate at 1.70, as the rate has bounced off of this level a few times over the past few days.
CAD weakened earlier in the week when the Bank of Canada decided to leave rates on hold as analysts had expected. This helped GBP/CAD gain and there has also been a boost to the Pound’s value this week after talk of the EU softening their demands for Brexit broke yesterday pushing the Pound higher.
The combination of the two has resulted in the move back above 1.70, after beginning the week just above 1.68, which was a previous support level for the GBP/CAD rate. Sterling has been coming under pressure as the final dates to arrange a Brexit deal between the UK and the European Union draws closer. Moving forward I would expect this topic to be the biggest mover of GBP exchnage rates by a considerable distance, as has been the case for over 2-years now.
The Bank of Canada does expect to hike rates in future owing to high inflation levels, and aside from monetary policy impacting the CAD I also expect the ongoing North American Free Trade Agreement to remain a key topic that could result in a major market movement depending on how the talks unfold. The US is currently in the process of re-negotiating the agreement between both Canada and Mexico, and updates have resulted in market movements recently.
It’s also worth noting that that there is an expected rate hike from the Bank of Canada in October, and this could impact CAD rates also.
Later today there will be a speech from the BoC’s Carolyn A. Wilkins and I expect this to have the potential to move markets in the event of an allusion to future monetary policy.
To cap off the week there could be a busy day as there will be US employment data along with Non-farm payroll data. This is worth being aware of at the figure will be released at 1.30pm tomorrow.
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