The Pound Sterling to Canadian Dollar (GBP/CAD) exchange was trading at a 1-month low on Thursday as the Bank of Canada (BOC) surprised the markets by leaving interest rates unchanged at 0.75% in the previous session.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate fell to a session low of 1.8923
The BOC took the markets by surprise as it chose to leave interest rates unchanged and as bank governor, Stephen Poloz appeared at ease with the performance of the Canadian economy. The governor’s upbeat view, dampened expectations that rates will be cut again over the coming months, and suggested that falling oil prices are not expected to prove to be as negative as expected.
Oil prices are expected to recover gradually over the coming months and inflation has stabilised suggesting that the outlook for the Canadian economy will improve later in the year.
‘Financial conditions in Canada have eased materially since January, in response to the bank’s recent monetary policy action and to global financial developments. These conditions will mitigate the negative effects of the oil price shock, further boosting growth through stronger non-energy exports and investment,’ said the bank.
Also aiding the Canadian currency against the Pound was news that oil prices ticked higher because of fighting in Libya and the Middle East. Saudi Arabia’s increase of its pricing terms to Asia also sent prices climbing.
UK House Prices Fall
The Pound Sterling came under pressure after data showed that UK house price inflation continued to slow. Prices were shown to have fallen between January and February according to Halifax. The dip marks the first decline since October. On a quarterly basis, prices were shown to have firmed by 2.6%.
‘We suspect that housing market activity is now gradually turning around after losing appreciable momentum from the early-2014 peak levels, and we see activity picking up modestly as 2015 progresses,’ said Howard Archer, chief UK and European economist at IHS Global Insight.
The Pound will likely experience more movement later in the session when the Bank of England (BoE) announces its latest interest rate and quantitative easing programme. Policy makers are expected to leave rates unchanged at 0.5% and leave its monthly quantitative easing programme at £375 billion.
The Canadian Dollar could receive support later in the session if upcoming Ivey PMI data comes in positively.
