The Canadian dollar looks to be ending the week off in a negative manner. With recent comments from Bank of Canada (BoC) governor Stephen Poloz bringing little to support the Canadian dollar’s longevity with a 1.75% interest rate, it appears that the currency could be on a downward slope. He announced that the cash rate would remain the same for this month, but speculations are arising concerning the CAD’s outlook after the central bank themselves admitted they may have been too optimistic back in October. Meanwhile, the GBP has rallied from the dovish comments of the BoC. This sees the GBP/CAD lift in favour of the pound sterling and adds another accomplishment to the GBP’s recent run of success which stemmed from the labour market data which shocked the markets earlier this week.
Canadian Dollar Looks to Be Under Fire as Bank of Canada Appears Uncertain on the Currencies Outlook
In his speech on Wednesday, BoC governor, Stephen Poloz looked less sure that Canada will be able to continue standing out from the crowd after announcing that the cash rate would remain at the same 1.75% level. In the speech, he admitted that the BoC may have been too optimistic with their expectations for the currency’s outlook back in October. Now Canadian policymakers see that economic growth came in lower than was previously forecast for Q4 in 2019 and the first three months of this year. Though they are remaining optimistic that there may be a pick-up but the central bank has hinted to the market that the economy is not living up to its previous forecasts.
Analysts at CIBC Capital Markets noted that a rate cut still be in the offing if a sluggish trend in the economy persists. And so, should slow GDP prompt a softer hiring and a climb in the jobless rate ahead, it will not only be more difficult to maintain the current interest rates from a political perspective, but it will also add to the downside risks to household confidence. As a result of the recent dip in the Canadian dollar, the pound sterling has edged over the Canadian dollar and increased the gap between the two in their GBP/CAD exchange rate.
GBP Gains Off the Back of Poor Canadian Dollar Outlook and Recent Job Data Success
This week has been a positive one for the GBP, early success with their jobs data at the start of the week set the currency up for a week of gaining on its major rivals. Many of whom, like the CAD are suffering at the hands of dovishness and poor economic figures. With the UK seeing an all-time high of individuals in employment, the GBP has rallied, and this has taken the Pound higher as the week drew to a close.
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