The current market bias for the CAD to GBP exchange rate is range-bound.
Key drivers include:
- The Bank of Canada's recent decision to maintain interest rates at 2.25% combined with strong job growth in Canada, which boosts confidence in the CAD.
- The Bank of England (BoE) cut rates but signaled that future cuts may be more cautious, which supports the GBP.
- Retail sales data from both Canada and the UK are expected to play an important role in shaping market sentiment in the near term.
The near-term trading range for CAD to GBP is expected to remain stable, reflecting the recent market stability. Currently, it is trading slightly above its three-month average, indicating low volatility.
An upside risk could stem from stronger-than-expected retail sales in Canada, which may lead to a CAD appreciation. On the other hand, a downside risk is posed by potential further rate cuts from the BoE that could weaken the GBP and influence the CAD-GBP dynamics.