GBP/CAD 4 month high
Sterling climbed to a four-month high against the Canadian Dollar, nearly seeing the rate rise back above 1.70 for the first time since June. This spike came off the back of better than expected UK GDP data which increased the chances of an interest rate hike in the UK next Thursday. If there was to be a hike from the Bank of England next week which is expected, then I think the 1.70 would almost certainly be broken.
Bank of Canada Interest Rate
Earlier this week the Bank of Canada chose to keep interest rates on hold having already hiked this year. Following better performance from the Canadian economy and a settling of the oil price, the central bank had confidence to tighten policy. However following the decision on Wednesday, the chances of a future hike in the short term have left, with March 2018 now being earmarked for another hike. The Bank of Canada Governor Stephen Poloz suggested that they will wait to see what happens with Canadian economic data before there are any changes.
Should there be any further positive data then it could mean that the hike date is brought forward in 2018 but it seems unlikely. If you’re looking to potentially purchase Canadian Dollars then waiting until the end of next week could mean you’re trading at a multi month high. There is always a chance that the Bank of England won’t hike but a recent survey of economist suggests there is an 84% chance.
The Canadian Dollar in my opinion is unlikely to itself lose any value as economic conditions look settled for them. Therefore, any chances of the rate improving will need to come from Sterling strength. The Brexit talks are still a significantly important factor but a hike next week could get some positive movement before the end of the year.