GBP/CAD tumbles to August lows as BoC signals end of easing cycle

• GBP/CAD extends losses for the ninth straight day, hitting its lowest level since early August.
• BoC cuts rate by 25 bps to 2.25%, as expected, but signals the end of the easing cycle.
• The British Pound remains under pressure as UK fiscal worries and dovish BoE bets weigh on sentiment.

The British Pound (GBP) continues to lose ground against the Canadian Dollar (CAD) on Wednesday as traders react to the Bank of Canada's (BoC) "hawkish cut." At the time of writing, GBP/CAD trades around 1.8381, hovering near its lowest level since early August and extending losses for the ninth straight day. The cross has shed nearly 1.8% from its October high of 1.8915, which marked the strongest level since June 2016.

The Canadian Dollar remains broadly supported despite the interest rate cut. The BoC lowered its interest rate by 25-basis-points (bps) to 2.25%, as expected, but signalled that further easing is unlikely. Governor Tiff Macklem said the current rate is "about the right level if inflation and activity evolve as projected," reinforcing the view that the central bank may have reached the end of its cutting cycle.

Oil prices, a key driver for the commodity-linked Canadian Dollar, lend additional support to the currency. West Texas Intermediate (WTI) crude trades around $60.41 per barrel, up more than 0.5% on the day.

Meanwhile, the British Pound weakens broadly amid rising fiscal concerns and mounting expectations of a Bank of England (BoE) interest rate cut following recent weaker-than-expected inflation and labour data. Markets now see an increasing likelihood of the easing as early as the November 6 monetary policy meeting.

Goldman Sachs on Tuesday said it now expects the BoE to cut rates next month, having previously forecast no move this year. According to LSEG data, markets price a 74% probability of a December rate cut, up from 44% in early October.