Bias: bearish-to-range-bound, CAD/GBP sits below the 90-day average and in the lower half of the 3-month range.
Key drivers:
- Rate gap: BoC remains at a relatively easy stance after its cut, while BoE is expected to unwind policy gradually, keeping GBP generally supported versus CAD.
- Risk/commodities: Oil remains firm and volatile, reinforcing CAD on Canada’s commodity-linked outlook.
- One macro factor: January Canadian data releases on trade balance and employment could swing the pair.
Range: CAD/GBP is likely to drift near the lower end of its recent three-month band, with a test of the lower bound if data disappoints.
What could change it:
- Upside risk: stronger-than-expected Canadian data lifting CAD.
- Downside risk: UK data surprises to the upside or the BoE keeps GBP supported, widening the gap.