Currency - GBP / Canadian Dollar

The major headlines for this week for the Canadian Dollar have been the fact that the Bank of Canada left their base interest rate on hold at 0.25 percent and that the price of oil (a significant Canadian export) has stabilised around $80 per barrel making Canada’s sand oils economical viable to extract. Beneath the interest rate story is the prospect for a rate hike as early as June. The BOC made it clear that they wouldn’t hike until then but most traders are assuming that June will therefore be the start date for a sequence of interest rate hikes. The Canadian Dollar is also picking up strength from investors seeking somewhere safe away from the beleaguered Euro and are dodging the dodgy Pound on their way across the Atlantic. The next Canadian interest rate decision is 20th April, followed by the Bank of Canada’s Monetary Policy Report on 22nd April and that will include a new quarterly forecast which will be very closely followed.
In the meantime, stronger commodities, an upturn in America’s fortunes and a steady demand for currencies in countries which look to be emerging well from the global slowdown will keep the Canadian Dollar in a position of strength. Thais is clearly fantastic news for anyone moving funds eastward across the North Atlantic but not so welcome for those migrating to, importing from or investing in Canada from the UK. The saving grace is that we haven’t fallen all the way down to 1976 low of C$ 1.52 or the 1986 low of C$ 1.4580 but we are very close as the long term chart above shows. I am fearful that we will slide towards these levels in the weeks ahead unless something significant changes in the market sentiment towards Sterling or we have a sudden news story which unsettles the commodity markets.