The Pound to Canadian Dollar (GBP/CAD) exchange rate surged last week, climbing above the CA$1.86 handle as geopolitical tensions and US foreign policy concerns weighed heavily on the ‘Loonie’.
Pound to Canadian Dollar (GBP/CAD): 1.86467
Euro to Canadian Dollar (EUR/CAD): 1.61902
Dollar to Canadian Dollar (USD/CAD): 1.39138
DAILY RECAP:
The Pound (GBP) opened last week on firmer footing after comments from Prime Minister Keir Starmer briefly lifted investor confidence.
Sterling drew early support after Starmer suggested in a BBC interview that the UK could pursue closer alignment with the EU single market where it serves the national interest, raising hopes of improved trade relations and reduced post-Brexit frictions.
However, the Pound struggled to extend its gains. A downward revision to UK services sector activity in December revived concerns about the economy’s underlying momentum, while a lack of further domestic data left Sterling largely rangebound through the remainder of the week.
The Canadian Dollar (CAD) faced sustained selling pressure, undermined by a combination of geopolitical anxiety and commodity-market volatility.
Investor sentiment toward the ‘Loonie’ deteriorated following the US military intervention in Venezuela and renewed rhetoric from the Trump administration regarding the Monroe Doctrine, developments that raised concerns about regional stability and Canada’s strategic position.
Additional pressure came from volatility in energy markets, as traders weighed the potential implications of Venezuelan oil supplies re-entering global markets.
CAD weakness was reinforced toward the end of the week after Canada’s latest labour market report showed a sharper-than-expected rise in the unemployment rate, extending the currency’s downside bias.
Near-Term GBP/CAD Forecast: UK GDP to Test Sterling Support
Looking ahead, the Pound to Canadian Dollar exchange rate could face renewed pressure with the release of the UK’s latest monthly GDP figures.
Economists expect uncertainty surrounding the autumn budget to have weighed on activity in November, resulting in another month-on-month contraction in growth.
A weak GDP reading could stoke expectations for further monetary easing from the Bank of England in the months ahead, potentially undermining Sterling.
Meanwhile, in the absence of major domestic releases, the Canadian Dollar is likely to remain sensitive to developments in Latin America and fluctuations in global oil prices.
