GBP/CAD settles below 111-month high, posts weekly loss

The GBP/CAD currency pair settled below recent high of 1.8842, its strongest level since June 24th 2016, in the wake of the Bank of England’s and the Bank of Canada’s policy decisions.

The Bank of England left its benchmark interest rate without change at 4% at its September 18th meeting.

Two policy makers voted in favor of a 25 basis point rate cut, while seven voted for leaving rates on hold.

The central bank cited progress in disinflation after past shocks, underpinned by restrictive policy.

Yet, inflation, at 3.8% in August, has remained above target and is projected to rise slightly in September before easing back toward 2%.

Wage growth, while still elevated, has slowed and is expected to ease further.

BoE policy makers also highlighted a gradual, data-driven approach with no pre-set trajectory for rate cuts.

Meanwhile, the Bank of Canada cut its benchmark interest rate by 25 basis points to 2.50% at its September 17th policy meeting, in line with market consensus.

The decision followed three consecutive holds.

Policy makers highlighted the Canadian economy showed signs of fragility to US tariffs after an initial period of resilience. This was evidenced by a 1.6% GDP contraction in the second quarter amid a 27% drop in exports.

At the same time, CPI inflation was below the 2% target in August, creating room for easier policy to address growth concerns.

The minor Forex pair lost 1.06% for the week.