CAD/GBP Outlook: Slightly positive but likely to move sideways, as the CAD is just below its recent average and near recent highs amidst mixed signals.
Key drivers:
- Rate gap: The Bank of Canada recently cut rates, while the Bank of England is expected to implement further rate reductions, creating uncertainty for the GBP.
- Risk/commodities: Oil prices are currently above average, supporting the CAD, as Canada is a major oil exporter and benefits from rising oil prices.
- Economic growth: The UK faces challenges in GDP growth projections and global trade tensions, which are likely to weigh on the GBP.
Range: The CAD/GBP is expected to hold within its recent stable range, not straying far from recent highs.
What could change it:
- Upside risk: A surge in oil prices could strengthen the CAD and push the pair higher.
- Downside risk: Further negative news regarding UK economic forecasts could lead to a decline in the GBP, adversely impacting the CAD/GBP exchange rate.