Increase in Interest Rates Doesn’t Help the Pound to Canadian Dollar Exchange Rate
Despite the Bank of England (BoE) increasing interest rates by 50 basis points on Thursday, the Pound-Canadian Dollar (GBP/CAD) exchange rate fell. The central bank’s statement that global inflation had likely reached its recent peak and the fact that the boost had been mostly priced in both contributed to the pair’s decline.
Canadian dollar demand is boosted by a weaker US dollar.
A stronger US Dollar stimulated a rise in commodity demand, which led to a strengthening of the Canadian Dollar (CAD) (USD). The GBP/CAD exchange rate was CA$1.6327 at the time of writing, down around 0.7% from the morning’s opening values.
Exchange rates for the pound fell as the BoE’s cautious rhetoric emerged.
Following the BoE’s interest rate announcement on Thursday, the value of the Pound declined. Although the central bank’s increase was anticipated, the pound suffered due to its cautious stance on inflation and the UK’s cost-of-living problem. If required, the bank said it will take into account raising interest rates once again.
Oversold CAD and Stabilizing Oil Prices Boost the Canadian Dollar
On Thursday, the Canadian Dollar strengthened versus a weaker Pound as it was likely viewed as oversold and crude oil prices leveled out. The Federal Reserve’s move to cut interest rates devalued the US dollar, increasing demand for oil and limiting CAD losses. Gains were constrained, though, since the US dollar remains weak.
Forecast for the pound will be impacted by the UK services downturn and political unrest.
The effects of the BoE’s interest rate decision going ahead, as well as any more political turmoil in the UK, will have an influence on the exchange rate of the pound. If it fulfills forecasts, the final UK services PMI number for January might have an impact on GBP on Friday. The Canadian Dollar, on the other hand, is projected to receive no important data releases this week, leaving the value of the currency up to the whims of crude oil prices.