Mark Carney of BoE Hints about a Possible Rate Hike Soon

Canadian Dollar CurrencyA better than expected inflation rate has been reported by UK Office for National Statistics in August. It has indeed raised the hopes for a hike in prices in November. In addition to this, Mark Carney who is the governor of the Bank of England has given hints for a possible rate hike in the near future.

All these factors have given rise to a rally in the currency pair GBP/CAD in September. The currency pair has gained around 700 pips till now and trading at 1.6500 levels. It is likely that the uptrend would continue in the future and the reason for same is discussed below.

Recently the Deputy Governor of Bank of Canada, Timothy Lane, gave a speech at Saskatoon Regional Economic Development Authority. He talked about the dismal impact of Canadian Dollar on the non-resource exporters of the nation in the financial crisis of 2008.

In addition to the above, the Deputy Governor said that he would not hastily make any decisions of a rate hike. He would monitor the impact of both higher interest rates on the economy and stronger Canadian Dollar beforehand.

It is to be noted that the increase in interest rates in the recent times was not at all impressive. As per the Statistics Canada, there is just 0.1% M-O-M increase in headline consumer inflation in August and was below Consensus estimates of a rise of 0.2 percent. Similarly, there was only 0.2 percent increase in core retail sales as compared to the expectations of the analysts of growth of 0.4 percent. Even the retail sales of last month were revised to 0.4% from 0.7%.

 RT UK

Joe Manimbo who is a senior analyst at the Western Union commented on the speech by Timothy Lane and said that the central bank is not in a comfortable position after the recent Canadian Dollar appreciation. He is of the opinion that inflation and economic growth would be affected.

A similar kind of opinion is given by Shaun Osborne who is a strategist at Scotiabank. He thinks that the Deputy Governor is voicing his concerns on the recent rally of the Canadian dollar to play with the expectations of the market for another hike rate in coming times. On the other hand, the currency Pound is showing an unexpected boost from Donald Tusk who is the European Council’s President.

Recently Tusk held a meeting with Theresa May, the Prime Minister of UK, and said that he is guardedly optimistic about the active efforts were taken by the British government for resolving the Brexit issue in spite of the fact that the Brexit talks have been futile till now.

Theresa May gave a speech on Friday in Florence and said that United Kingdom is looking forward to maintaining EU payout in return for a 2-year transitional deal. The 4th round of negotiations between UK and EU is currently underway in Brussels. The GBP/CAD currency pair is consolidating at 1.6550 levels for the last ten days. In addition to this, the RSI indicator is in oversold region. Hence, the topside breakout is likely to happen quite soon. The next significant resistance level is expected at 1.7050 levels.

GBPCAD Pair Sept 29th 2017

GBPCAD Pair Sept 29th, 2017

In FX market, traders are recommended to open a LONG position in GBP/CAD currency pair near 1.6660 and place stop order below 1.6550. The profit can be booked near 1.6880 if the currency pair rises as per the speculation.

Traders are also advised to invest in a CALL option from any of the recommended binary options broker mentioned over here. The strike price of about 1.6660 and trade expiry of October 8 looks ideal for this trade.

Rich Archer

Rich Archer

Hi, my name is Rich Archer. I am living in London. Welcome to Binary Manual. Reach to Binary Options broker reviews and market news here.


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