BoC's Inflation Forecast Matches Up With March CPI Print

BoC's Inflation Forecast Matches Up With March CPI Print

The pair opened the week at the level of 1.7945 and advanced to a high of 1.8055 on Tuesday, before slipping back below the week's opening levels again on Wednesday. On Friday morning, GBP/CAD was trending near its lowest level in a month - 1.7787.

The interest rate has gone up three times since last July, but the central bank has not moved it since January.

StatsCan says the average of three Bank of Canada measures of core inflation, which eliminates higher cost items, was at two per cent.

The Pound has become a lot less appealing to investors over the past week. Yesterday, the currency weakened as the Bank of Canada failed to provide clear guidance regarding future rate hikes.

Carney offered comments on his view of the United Kingdom monetary policy outlook on Thursday evening, in which his caution was perceived as dovishness. Instead of hinting at an upcoming hike, the BoC noted slack in the economy and stated that interest rates may need to remain below the neutral range.

Out of caution that negotiations could worsen again, the Bank of Canada played up concerns about how protectionist trade policies and clashes over trade could negatively impact Canada's economy. The euro is down slightly against the Canadian dollar, with EUR/CAD now above 1.5610.

The Canadian dollar dipped to $1.2712 to the us dollar, or 78.67 USA cents, from $1.2666, or 78.95 USA cents. The loonie is strengthening against all major currencies except the Australian dollar.

Still, the Canadian Dollar has found some support this week, largely due to trade developments and risk-sentiment.

The main contributor to the higher annual inflation rate in March was a 17.1 percent jump in gasoline prices.

The headline figures will be watched closely by CAD traders, as the Bank of Canada (BOC) struck a notably dovish tone following their latest Rate Decision that saw the central bank hold steady on rates, and a miss for CPI and sales figures could push out expectations of a rate increase. "However, with part of that due to the transitory effects of higher gas prices and minimum wage hikes, we see little reason for the Bank of Canada to react aggressively to the slight overshoot". Hence, the BoC's forecast, for now, is consistent with March inflation data.

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