In fact the BoC might have lowered its outlook – thus no doubt causing speculation about a further easing of monetary policy.
The stronger CAD can easily be explained with the rise of the oil price since the beginning of the year, the more optimistic Bank of Canada (BoC)
On the flip side, nobody expects the Bank of England (BoE) to change its monetary policy today. In view of the high uncertainty ahead of the Brexit referendum in June.
The BoE will not want to put any additional strain on the market and the British economy by allowing any speculation about an adjustment of its monetary policy.
The central bank is awaiting cautiously for outcome of Brexit referendum as UK exiting membership from EU is the most likely consequence to hamper their trade balance.
In particular as inflation is also pointing towards a wait and see approach. Today’s meeting is more of a non-event for GBP.
Technically, in just last five months, GBPCAD has declined from the highs of 2.0949 to the current 1.8162 levels, (i.e. almost 13.3%). The pair has consistently been below 21DMA ever since mid of last January, that is when shooting occurred at peaks. As there is no trace of buying signals any technical convincing indicators, we continue to foresee more weakness in this pair.
Due to above mentioned reasons, we anticipate and advocate – GBP/CAD's further slumps and hence arrest downside risks with bearish derivative contracts. We come up with suitable hedging strategies in our upcoming posts. Keep watching for more readings on hedging tools.
The material has been provided by InstaForex Company – www.instaforex.com