The British Pound steadied against the Canadian Dollar on Friday after a 0.56% slump the day before ahead of the release of UK manufacturing and Canadian GDP growth data.
Yesterday the Sterling lost ground against major peers after Bank of England Chief Economist Huw Pill said policy makers would “see the job through” on bringing persistent inflation back down to the bank’s 2% target, even if there was a risk high interest rates hurt British economy.
“The key element is that we on the MPC need to see the job through and ensure a lasting and sustainable return of inflation to the 2% target,” Pill said at a research conference hosted by the South African Reserve Bank.
“At present, the emphasis is still on ensuring that we are – in the words of the MPC’s last statement – sufficiently restrictive for sufficiently long to ensure that we have that lasting return to target.”
Futures markets are now pricing an 80% chance of a 25 basis point rate hike by the BoE in September, while interest rates are expected to peak at 5.75% before year-end.
“Pill’s comments appear consistent with another quarter-point turn of the screw on 21 September, but not necessarily thereafter,” Ray Attrill, head of foreign-exchange strategy at National Australia Bank, was quoted as saying by Reuters.
On the macro data front, the final UK Manufacturing PMI reading probably confirmed the preliminary estimate in August. The index came in at 42.5 last month down from a reading of 45.3 in July, while marking the sharpest contraction in manufacturing activity since the pandemic-driven slump in 2020.
New orders for goods continued to decrease in August, as businesses cited client reluctance and lower disposable household incomes against the backdrop of higher interest rates. The final PMI estimate is due out at 8:30 GMT.
Meanwhile, CAD traders now look to Canadian GDP growth figures for Q2, which will be released at 12:30 GMT.
The Canadian economy probably expanded at an annualized rate of 1.2% in the second quarter, according to market consensus, following a 3.1% growth in Q1.
As of 7:58 GMT on Friday GBP/CAD was inching up 0.03% on the day to trade at 1.7122. The minor Forex pair has retreated 1.11% from the 1-month high of 1.7315, which it registered on August 22nd.
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