GBP/CAD Update
Nov 4th 2008 | 8:18 pm
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GBP/CAD Update
As requested by a number of BE regulars here's a brief update on what's happening in the currency markets.
The beginning of the month pointed to a much stronger than expected start to the third quarter; the economy grew 0.7% in July and this was primarily due to a surge in crude oil and natural gas production - This was more than three times market forecasts of 0.2%.
The Canadian dollar then weakened aggressively against the Pound as investors bet the Bank of Canada would cut interest rates further to spur economic growth in response to expectations of weaker US growth. Furthermore, the decreasing demand for oil and commodities also impacted the CAD. Along with other leading banks the BoC cut its key lending rate in an attempt to increase confidence and get credit flowing again; the rate cut came ahead of the interest announcement later in the month.
With concerns that the global economy is teetering on the verge of a recession (which would ultimately have an effect on the price of oil) GBP/CAD surged to an 11 month high as a slide in the price of oils and metals dragged the commodity – linked currency lower across the board. The attention focused on this and interest rates which meant the news of the re-election of a minority conservative government had little or no impact on the currency.
The decision to cut interest rates at the end of the month by a further 0.25% to 2.25% created some sever volatility, despite GBP/CAD finishing marginally lower at the end of the month. The BoC added that it would likely have to east further to combat the effects of the global credit crisis “In line with the new outlook, some further monetary stimulus will likely to be required to achieve the 2.0% inflation target over the medium termâ€.
Going forward most industry analysts expect continued volatility. No surprises there!
Whilst FX isn't the most thrilling of subjects, as soon as you make the decision to emigrate you should begin thinking about your foreign exchange requirements. The sooner you begin to think about your money transfers, the more likely are to make your money go as far as you do.
Best Regards
Mark Bodega
Director - HiFX
The beginning of the month pointed to a much stronger than expected start to the third quarter; the economy grew 0.7% in July and this was primarily due to a surge in crude oil and natural gas production - This was more than three times market forecasts of 0.2%.
The Canadian dollar then weakened aggressively against the Pound as investors bet the Bank of Canada would cut interest rates further to spur economic growth in response to expectations of weaker US growth. Furthermore, the decreasing demand for oil and commodities also impacted the CAD. Along with other leading banks the BoC cut its key lending rate in an attempt to increase confidence and get credit flowing again; the rate cut came ahead of the interest announcement later in the month.
With concerns that the global economy is teetering on the verge of a recession (which would ultimately have an effect on the price of oil) GBP/CAD surged to an 11 month high as a slide in the price of oils and metals dragged the commodity – linked currency lower across the board. The attention focused on this and interest rates which meant the news of the re-election of a minority conservative government had little or no impact on the currency.
The decision to cut interest rates at the end of the month by a further 0.25% to 2.25% created some sever volatility, despite GBP/CAD finishing marginally lower at the end of the month. The BoC added that it would likely have to east further to combat the effects of the global credit crisis “In line with the new outlook, some further monetary stimulus will likely to be required to achieve the 2.0% inflation target over the medium termâ€.
Going forward most industry analysts expect continued volatility. No surprises there!
Whilst FX isn't the most thrilling of subjects, as soon as you make the decision to emigrate you should begin thinking about your foreign exchange requirements. The sooner you begin to think about your money transfers, the more likely are to make your money go as far as you do.
Best Regards
Mark Bodega
Director - HiFX
