On the same day, Canada reported a marginal increase in consumer prices by 0.1% for October. However, headline inflation unexpectedly dropped to 3.1%, with core inflation decreasing slightly to 2.7%. Despite a significant annual decrease in gasoline prices by 7.8%, the core rate excluding gasoline stood at 3.6%. In response to these figures, Scotiabank analysts anticipate a subdued reaction from the Canadian dollar but expect limited depreciation due to the high core prices supporting a relatively hawkish stance from the Bank of Canada.
Adding to economic measures, the Canadian government presented a fiscal update that included C$15 billion allocated for new rental housing construction loans over the next decade and a C$1-billion fund aimed at increasing affordable housing availability.
Analysts are closely monitoring the potential impact of these developments on currency movements. Simon Harvey from Monex Europe noted that the BoE maintains flexibility for future rate hikes to manage inflation effectively. Meanwhile, James Moberly from Goldman Sachs highlighted that conservative fiscal measures are expected at the Autumn Statement but did not rule out larger tax cuts in the upcoming Spring Budget.
As Sterling’s trajectory remains subject to potential shifts following Chancellor Hunt’s Autumn Statement and Bank of Canada Governor Tiff Macklem’s address—which may signal an end to interest rate increases—market participants are bracing for further volatility in the GBP/CAD exchange rate.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
To read the full article, Click Here