Market Update - GBP CAD

We've had a very mixed bag of data for the pound over the last week. Public sector borrowing was far higher than expected for October (£11bn versus £7bn expected) and traders are still concerned that further quantitative easing may lie ahead after last week's Bank of England minutes revealed that one MPC member voted for a £40bn increase. On the plus side, inflation for October was a healthy 1.5%, and we are expecting a slight upward revision to the preliminary estimate of third quarter GDP tomorrow. In Canada things were quieter, with annualised October inflation ticking into positive territory at 0.1%. Finance minister Jim Flaherty reiterated his intention to continue the stimulus spending package into 2010, but said there would be no new large spending items in the budget. Canada slumped into a budget deficit for 2008-09, but is unique among the G7 in being the only country to have maintained a budget surplus for the ten preceding years.

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