CAD/GBP Outlook: Bearish, as the rate is below the recent average and at recent lows with pressure from key economic factors.
Key drivers:
• Rate gap: The Bank of Canada's recent interest rate cut has weakened the Canadian dollar compared to the British Pound, where the Bank of England is maintaining a cautious rate stance.
• Risk/commodities: Recent volatility in oil prices, which are currently above average, does provide some support for the CAD but not enough to offset the bearish sentiment overall due to trade issues.
• One macro factor: The UK is facing potential economic contraction due to new tariffs that threaten to impact GDP, creating uncertainty around the pound's strength.
Range: The CAD/GBP is likely to hold its position near recent lows, within its stable range.
What could change it:
• Upside risk: A significant rebound in oil prices could support the CAD against the GBP.
• Downside risk: Further economic stress in the UK impacting the pound could drive more volatility in this pair.