The current market bias for the CAD to GBP exchange rate is range-bound.
Key drivers include:
- Interest rate differential: The Bank of Canada is maintaining a rate of 2.25%, while the Bank of England is expected to reduce its rates to 3.25% by mid-2026, affecting the CAD's appeal relative to the GBP.
- Economic performance: Canada’s stronger job growth, with 54,000 jobs added recently and an unemployment rate decrease, contrasts with the UK's anticipated economic slowdown and fiscal concerns.
- Oil Price Trends: CAD is influenced by oil prices, which are currently 2.9% below their 3-month average, potentially weighing on the CAD.
The near-term range for CAD to GBP is expected to remain stable, with prices fluctuating within a tight range.
An upside risk could emerge from rising oil prices boosting the CAD, while a downside risk might be posed by further U.S. tariffs impacting Canadian exports.