The GBPCAD was moving higher into a recent range after finding buyers at the 1.6800 level. The pound was moving higher after the Bank of England Deputy Governor Dave Ramsden said he saw the current 0.1% interest rate as the floor for the for U.K. rates. But he added that the bank “duty-bound” to consider negative rates in order to help the economy recover from the recent turmoil.
The pound got a lift after comments in the recent Monetary Policy Committee (MPC) meeting minutes suggested that the bank had discussed the potential for negative rates with the possibility of implementing them by year-end. Sterling had lost some ground on that idea but has found buyers after today’s comments.
One risk for the pound is still Brexit and this was discussed by the MPC as a potential need for a negative rate so maybe the market misinterpreted the statements in the minutes. The mid-October deadline is fast-approaching and Prime Minister Boris Johnson’s controversial internal markets bill will have to go before a Parliamentary vote.
The Canadian dollar still has a rate advantage over the U.K. with a 0.25% reading but that may come under pressure with inflation at only 0.1%. The majority of developed nations are treading near zero and the next policy meeting could see GBPCAD move higher. The underlying risk to the downside is still Brexit and the virus so a long position may be for the brave.
The GBPCAD range is easily defined with resistance at the 1.7600 and 1.7800 levels. The key support at 1.6800 held and the market will need a breakout in one of these directions to see a bigger trend begin. The Investing Cube team is currently available to assist all levels of traders with a Forex Trading Course or one-to-one coaching.
