The recent outlook for the CAD to GBP exchange rate reflects a cautious sentiment on both sides, influenced by various economic and political developments. As of late October 2023, the Canadian dollar (CAD) has seen a slight decline due to slower progress in US-Canada trade negotiations, causing market apprehension regarding Canada’s economic resilience. Analysts suggest that the Canadian dollar's performance may remain subdued unless trade talks show tangible progress.
On the other hand, the British pound (GBP) has edged higher, finding some support after Prime Minister Keir Starmer expressed his backing for Chancellor Rachel Reeves. However, concerns surrounding the UK's fiscal stability, particularly related to recent welfare reforms, contribute to a limited recovery scope. Market observers note that the GBP's movement is likely to be influenced more by overarching market trends rather than domestic data, as the economic calendar appears light.
Meanwhile, recent CAD data shows that the currency has been trading at 14-day highs near 0.5414 GBP, slightly above the three-month average and within a stable range between 0.5315 and 0.5464. The Canadian dollar's correlation with oil prices remains pivotal; currently, oil has been on an upward trend, trading at 70.44 USD, which is notably above its three-month average of 67.21 USD. This increase in oil prices, along with the Bank of Canada's recent pause on interest rate cuts, could lend temporary support to the CAD in the coming weeks.
As the political landscape evolves, marked by shifts in leadership and ongoing trade tensions with the U.S., analysts predict that both currencies will continue to navigate through a phase of uncertainty. Future movements in the CAD to GBP exchange rate will likely hinge on developments in commodity prices, interest rate policy, and broader economic indicators that shape investor sentiment on both sides of the Atlantic.