The Pound to Canadian Dollar (GBP/CAD) exchange rate steadied on Thursday after a volatile week, holding just above multi-month lows as traders digested a hawkish rate cut from the Bank of Canada (BoC) and lingering fiscal worries in the UK.
Pound to Canadian Dollar (GBP/CAD): 1.83917 (-0.03%)
Euro to Canadian Dollar (EUR/CAD): 1.61754 (-0.01%)
Dollar to Canadian Dollar (USD/CAD): 1.39845 (+0.3%)
DAILY RECAP:
The Canadian Dollar (CAD) held firm on Thursday as markets assessed the Bank of Canada’s decision to cut rates by 25 basis points to 2.25%, marking its lowest policy rate since June 2022.
While the move was fully priced in, Governor Tiff Macklem’s subsequent remarks struck a notably hawkish tone, lending support to the Loonie.
Macklem said interest rates were now “about the right level if inflation and activity evolve as projected” — a signal to markets that the BoC may be approaching its neutral rate, with further cuts far from guaranteed.
This stance allowed CAD to retain its post-decision gains, with traders viewing the message as a sign the central bank is confident in the economy’s resilience despite recent weakness.
The Pound (GBP), meanwhile, remained under pressure amid ongoing unease ahead of Chancellor Rachel Reeves’s Autumn Budget.
Reports suggesting a £20 billion fiscal shortfall have fuelled expectations of both tax hikes and spending cuts, sparking fears that the government’s tightening measures could stifle growth.
Speculation has also intensified that the Bank of England (BoE) may need to respond with a December rate cut to cushion the impact on the UK economy, further weighing on Sterling sentiment.
Near-Term GBP/CAD Forecast: Canadian GDP Data to Set the Tone
Looking ahead to Friday, the next major driver for GBP/CAD will be Canada’s September GDP report.
Economists expect a mild contraction, reflecting softer domestic demand and external pressures from weaker US trade activity. A negative reading could see the Loonie pare back recent gains as growth concerns resurface.
However, a stronger-than-expected print would reinforce the BoC’s hawkish stance and likely keep GBP/CAD anchored near its current lows.
With the UK data calendar empty, Sterling will remain sensitive to fiscal headlines and broader market sentiment as traders position ahead of next week’s developments.
