Bank of Canada Maintains Policy Rate Amidst Global Economic Uncertainty

Summary:

The Bank of Canada announced its decision to keep the overnight rate steady at 5%, continuing its policy of quantitative tightening.

BUY GBPCAD

Close Time

CLOSED

1.71590

Entry Price

17500.00000

1.70000

1.87739 +0.00240 +0.13%

0.6

Pips

Loss

1.70000

1.71584

Exit Price

1.71590

Entry Price

17500.00000

The Bank of Canada announced its decision to keep the overnight rate steady at 5%, continuing its policy of quantitative tightening. While the global economy is anticipated to grow at about 3%, the US economy has shown resilience, although growth is expected to moderate in the latter half of the year. Meanwhile, the euro area is projected to gradually recover from its current weak growth trajectory.

In Canada, economic growth stagnated in the second half of last year, leading to an excess supply situation. Labour market conditions are showing signs of easing, with slower employment growth and a gradual increase in the unemployment rate, reaching 6.1% in March. However, there are indications that wage pressures may be moderating.

Looking ahead, economic growth is forecasted to improve in 2024, driven by strong population growth and a recovery in household spending. Residential investment is strengthening in response to robust housing demand, while government spending is also contributing to growth. Business investment is expected to recover gradually, and exports are anticipated to continue growing solidly.

The Bank forecasts GDP growth of 1.5% in 2024, 2.2% in 2025, and 1.9% in 2026, with the economy gradually absorbing excess supply through 2025 and into 2026.

Inflation in Canada slowed to 2.8% in February, with easing price pressures across goods and services, although shelter price inflation remains elevated. Core measures of inflation have also moderated, with the Bank expecting CPI inflation to be close to 3% in the first half of the year, moving below 2.5% in the second half, and reaching the 2% target in 2025.

Given the outlook, the Governing Council decided to maintain the policy rate at 5% and continue normalizing the Bank’s balance sheet. While inflation remains elevated, recent months have seen further easing in CPI and core inflation. The Council will monitor the sustained downward momentum in inflation and key economic indicators, remaining committed to restoring price stability for Canadians.

TECHNICAL VIEWPOINT

GBPCAD 4 HOUR CHART

The GBPCAD has breached the supply area on the 4-hour chart, indicating a prevailing buyer bias. Following a retest of the 1.71500 level, a potential rally towards the next significant resistance at 1.7500 is anticipated. However, a drop below the 1.7000 level would signal a shift in momentum, with bears likely gaining control of the market.

with the GBPCAD displaying strength above the supply area and a retest confirming buyer momentum, attention turns towards a potential move towards the 1.7500 resistance level. Nevertheless, vigilance is warranted, as a dip below 1.7000 could usher in a bearish scenario.

TECHNICAL RECOMMENDATION

BUY GBPCAD

ENTRY: 1.71540

STOPLOSS: 1.70000

TAKE PROFIT: 1.75000

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Risk Disclosure

The risk of loss in trading financial instruments such as stocks, FX, commodities, futures, bonds, ETFs and crypto can be substantial. You may sustain a total loss of the funds that you deposit with your broker. Therefore, you should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources.

No decision to invest should be made without thoroughly conducting due diligence by yourself or consulting with your financial advisors. Our web content might not suit you since we don't know your financial conditions and investment needs. Our financial information might have latency or contain inaccuracy, so you should be fully responsible for any of your trading and investment decisions. The company will not be responsible for your capital loss.

Without getting permission from the website, you are not allowed to copy the website's graphics, texts, or trademarks. Intellectual property rights in the content or data incorporated into this website belong to its providers and exchange merchants.

Recent Searches

Top Searches

Markets

Analysis

User

24/7

Economic Calendar

Education

Data