At the back end of last week the CAD strengthen against the pound after the BoC signalled the end of their monetary easing cycle.

The BoC unexpectedly left rates on hold at 3%, countering expectations of a 25 basis point cut to 2.75% The central bank also signalled the end to its rate cutting cycle amid unexpectedly strong inflationary pressures.

Governor Mark Carney said price hikes now outweighed the weak economic growth as the top risk to the economy. The central bank said inflation is likely to be greater than previously projected in April, rising above 3% later this year, in contrast to their previous estimate of below 2% all year.

This week the BoC signalled the end of a 5 month cutting cycle which lowered rates by 150 basis points. We expect the end of the cutting cycle to benefit the CAD in the short term; but the fact still remains that growth has slowed significantly in Canada with inflationary risks on the upside.

We expect the cross to remain range bound between 2.02 and 1.92