The GBP/CAD currency pair was mostly steady on Wednesday, holding near a two-week low of 1.8422.
Hot UK inflation figures shifted focus back toward the prospect of tighter Bank of England monetary policy, while the Canadian Dollar benefited from a stronger risk-on backdrop after US President Donald Trump extended the ceasefire despite the breakdown of second-round US–Iran talks.
Data by the Office for National Statistics showed that the UK Consumer Price Index had risen 3.3% year-on-year in March. It followed two consecutive months of 3% annual inflation and underscored the inflationary impact of the Middle East war.
On a monthly basis, the CPI rose 0.7%, or at its fastest rate in nearly a year, beating expectations of a 0.6% rise.
Price pressures extended beyond headline consumer inflation. Producer and retail price measures also exceeded forecasts, suggesting a more persistent inflation backdrop.
The stronger inflation data and perceived upside risks to prices are likely to give more hawkish members of the BoE Monetary Policy Committee additional justification to argue for potential policy tightening in the future.
Meanwhile, renewed tensions in the shipping lanes near Iran added to the positive undertone for oil and, by extension, the Canadian Dollar. Maritime authorities reported that a Liberia-flagged container ship came under fire from a gunboat associated with Iran’s Islamic Revolutionary Guard Corps.
In contrast, a Bloomberg headline citing Tasnim News Agency, which is linked to the IRGC, indicated that Iran had received “some sign” that the United States might be prepared to ease its naval blockade. Market participants monitored these mixed signals against the backdrop of rising energy prices.
The GBP/CAD currency pair was last down 0.01% on the day to trade at 1.8437.
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