GBP falls as the Bank of England decides to keep the current interest rate

Today's expected range for the Canadian Dollar against the major currencies:

US Dollar             1.2375-1.2475

Euro                     1.4300-1.4400

Sterling                1.6800-1.6900

The US Dollar index is stronger this morning after the US Federal Reserve as expected announced that it would cut its stimulus program by some $15 Billion a month. The Fed went out of its way to point out that it did not see any early rise to interest rates and any increase in interest rates going forward would depend on the employment situation, it also is maintaining that inflation will be temporary and will fall back to lower levels in 2020. Overall markets reacted positively to the news, the Dollar initially traded weaker and stock moved higher but the Greenback was able to recover in the overnight session.

In the UK, the Bank of England announced that they are keeping interest rates at 0.1% which is unexpected as market watchers were expecting an interest rate hike of 0.15%. As I write GBP.USD has fallen from 1.3640 to trade at 1.3550 and GBP.CAD has fallen from 1.6940 to trade at 1.6840 so clearly the market was caught off guard by this move. The Bank's committee said they weighed the risks of rising inflation against employment that need to grow and the risk of the global recovery slowing.

The Canadian Dollar had a strong day yesterday as it traded below the 1.2400 (0.8065) level but as the Greenback grew stronger overnight it was lost some ground to move back to trade at 1.2430 (0.8045) this morning. The Loonie is stronger against the other currencies so overall not a bad showing from our Dollar.

We do get some trade data out of the US and Canada but for the most part I think the currency market will remain range bound as markets continue to digest the latest Central Bank news.