In line with most of the other Majors, Sterling continued to lose ground against the Canadian Dollar over the Christmas period off the back of a raft of negative Sterling sentiment and rhetoric indicating that the UK is heading deeper into recession.

However, the strength of the Canadian Dollar against the Pound doesn’t accurately reflect the state of the Canadian economy as a whole, as they too are suffering the effect of the global credit crisis. The interest rate cut in early December and accompanying statement was almost a U-turn in fiscal policy from only three meetings ago in July when there was a surprise rate hike and comment of upwards inflationary pressures, strong consumer spending and a healthy housing market.

The December rate cut indicated lower than expected inflation and a contraction of their export market which accounts for a large part of their economy. The drop in exports was attributed in part to the growing strength of the currency which has curbed their competitiveness in the global economy.

In the short term however, and in particular with the UK interest rate decision looming, we can expect the trend for the weakening Pound to continue for some time. For those with a Canadian Dollar requirement looking to the future, Forward Purchasing your currency offers you the ability to lock into a rate of exchange now – enabling you to be safe in the knowledge that any fluctuations over the period won’t affect you.