The GBP/CAD currency pair edged lower on Tuesday, reversing a gain from the prior trading day, ahead of the outcome of the Bank of England’s and the Bank of Canada’s policy meetings.
The Bank of England is expected to leave its benchmark interest rate intact at 3.75% at its March 19th meeting.
BoE’s February decision to hold rates was a narrow 5 to 4 vote, as officials weighed easing inflation pressures against risks stemming from a weakening economy. Four members voted in favor of a 25 basis point cut, which highlighted growing divisions within the Monetary Policy Committee.
BoE policy makers said that risks of persistent inflation had decreased, while weaker demand and a softening labor market posed downside risks.
The MPC indicated that further rate cuts were likely, but they would depend on incoming inflation figures. BoE Governor Andrew Bailey expressed confidence that inflation would reach the 2% target sooner than previously thought.
Meanwhile, the Bank of Canada is expected to keep its benchmark interest rate intact at 2.25% at its March 18th policy meeting.
Policy makers had said the current stance was appropriate given the BoC’s baseline economic outlook.
Yet, recent tariff threats from the US brought back concerns of trade disruptions and prompted the Governing Council to warn of uncertainty, potentially warranting a monetary policy adjustment in either direction.
In its quarterly monetary policy report, the central bank maintained its forecast for modest growth this year and in 2027, while inflation is expected to hover around the 2% target.
The GBP/CAD currency pair was last down 0.10% on the day to trade at 1.8218.
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