- BoE likely to announce further quantitative easing
- Uncertain UK economy to limit Sterling gains
GBPCAD unsurprisingly fell to a multi-year low in the immediate aftermath of the UK’s decision to leave the EU. The Pound has stabilised a little, although the rate did ease lower following poor UK construction data of 46.0, expected at 50.6.
Last week’s catalyst for a mild correction for the Pound were more than likely due to the measures announced by the Bank of England to combat ‘Brexit’ instability, which include cutting the UK interest rate and expanding quantitative easing.
While not beneficial to all, these measures nonetheless show that the BoE is remaining active in managing the nation’s finances.
After a month of polls influencing volatility, we are now back to the norm whereby trade data affects rates and earlier this week saw the Pound sell off after UK’s June construction PMI has plummeted from 51.2 to 46 - falling from growth into contraction. In addition, Chancellor George Osborne has controversially announced that he will be cutting corporation tax to fewer than 15% in a bid to increase overseas investment in a more economically unstable UK.
The Canadian Dollar, meanwhile, has been performing comparatively well with rising commodity prices across the board. During the past week, the first in the wake of the decision for the UK to leave the EU, the Pound reached a high of 1.7575 against the Canadian Dollar before falling to a low of 1.7111.
Research Report by Michael Hart
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