Bias: The CAD/GBP outlook remains range-bound as the pair is near the 90-day average and within the middle of the 3-month range.
Key drivers:
• Rate gap: The Bank of Canada has recently cut rates, indicating a shift toward supporting growth, while the Bank of England is expected to approach further cuts, suggesting limited upward movement for the pound.
• Risk/commodities: Oil prices are currently above average, positively impacting the CAD, as rising oil prices benefit Canada's economy through increased export revenue.
• One macro factor: The UK’s GDP growth is projected to slow, which could pressure the pound as household incomes and public spending stagnate.
Range: The CAD/GBP exchange rate is expected to hold steady, with potential to drift within the recent range rather than testing extremes.
What could change it:
• Upside risk: A significant rebound in oil prices could strengthen the CAD further against the GBP.
• Downside risk: A deterioration in Canadian employment figures could weigh on the CAD, especially if UK data surprises positively.