The Bank of Canada will reveal their latest interest rate decision this afternoon. The central bank has been one of the more active this year having already raised rates on two occasions with America the only other developed economy to do the same this year. There isn’t expected to be any changes to the policy this time, however the central bank could provide some clarification on when the next hike may come or at least what will need to change in order for that to happen.
The Canadian Dollar has so far during this December been very volatile with OPEC (Organisation of Petroleum Exporting Countries) coming to an agreement about production over the next year. The price of oil has been a key driver for Canadian Dollar exchange rates as the country’s main export. Moving forwards if the price of oil rises or falls, you can usually see a direct correlation within the currency market movements. Now that the countries who produce oil have agreed to production levels the price of oil shouldn’t fluctuate too much.
GBP/CAD exchange rate forecast
Over the last week Sterling had started to make ground against most major currencies including the Canadian Dollar. This had been mainly attributed to the two sides in the Brexit talks coming to an agreement over how much the UK should pay the EU upon leaving the European Union. However, since talks yesterday revealed there was not a complete deal, mainly down to Irish border negotiations, Sterling gave up much of its early gains.
Over the next few days there is an expectation that a deal between the UK and the EU should be agreed and this in turn should have a positive effect on Sterling exchange rates. In my opinion we could see the GBP/CAD rate back around the 1.75 level which was last available at the end of May and before that point it was before the EU Referendum took place.