GBP CAD Exchange Rate Rallies Following Comments from BoE?s Tenreyro

The GBP CAD exchange rate surged close to a weekly high this morning as investors welcomed comments from the Bank of England’s (BoE) Silvana Tenreyro regarding the possibility of future rate hikes.

<h2>Pound Canadian Dollar (GBP CAD) Surges on Rate Hike Hints</h2>

The Pound Canadian Dollar (GBP CAD) exchange rate leapt by around half a cent this morning as a BoE policymaker suggested that interest rates could in fact rise over the next couple of years.

While Tenreyro said that direction of the bank’s future monetary policy would be dictated by Brexit, she suggested that this did not necessarily mean that it would stick by its accommodative policy.

In an interview with Bloomberg Tenreyro said;

‘People up until recently thought that Brexit meant monetary policy would remain highly accommodative and interest rates would stay low forever.’

‘But Brexit might present other challenges that require the opposite. It might require an adjustment either way, and it’s not obvious.’

The BoE’s newest policy maker also reiterated that the bank is unsure exactly what impact the UK’s exit from the EU will have on the domestic economy, with Tenreyro adding;

‘We don’t know how the demand side will respond. It depends on how households and companies react to the new normal, to the new potential. Shocks can hit the economy one way or the other and we will have to respond to that.’

The remarks were in stark contrast to the Bank of England’s tone following its decision to raise interest rates earlier this month in which it appeared that the next rate hike would be some way off.

<h2>Canadian Dollar Remains Subdued In Light of Poor Retail Sales </h2>

The Canadian Dollar meanwhile remains on the back foot today as investors remain wary of the currency in the wake of yesterday’s disappointing retail sales figures.

According to figures released by Statistics Canada showed that sales growth rose from -0.1% to just 0.1% in September, putting it well behind expectations that growth would reach 0.9%.

With sales growth being broadly flat over the last four months concerns are growing over Canada’s economy, with fears that growth will be pinned back as consumers cut their spending.

<h2>GBP CAD Exchange Rate Forecast: May and Tusk to Meet to Discuss Brexit</h2>

Looking ahead the GBP CAD exchange rate may be able to end this week’s session higher again depending on the outcome of talks between Theresa May and the EU's Donald Tusk, with investors hoping that the talks will lead to some progress on a number of key issues that are holding back negotiations.

Meanwhile the Canadian Dollar may struggle to recoup it losses before the end of the week as Canada’s budget deficit is expected to have held at a five-month low in September.

<h2>Current Interbank Exchange Rates</h2>
At the time of writing the GBP CAD exchange rate was trending around 1.6958 and the CAD GBP exchange rate was trending around 0.5892.