GBP/CAD - British pound to Canadian dollar

GBP/CAD weakened for most of 2016, and especially following the Brexit vote. After strengthening slightly in January 2017, the pair took off in April following Theresa May's call for an early election. As the Conservatives fared poorly in the following election, GBP/CAD gave back most of its initial gains. The Canadian dollar also strengthened substantially in the latter half of 2017, given strong economic growth and interest rate hikes. 

Short term outlook
Bullish
Medium term outlook
Bullish

British pound daily update

The British pound is higher today (particularly against the US dollar), and has been strengthening throughout the week. Thanks to strong regional growth and rising rate hike expectations, the British pound remains in a bullish trend. Pound sterling is also benefiting from a particularly weak US dollar, which is currently trading at 3-year lows. Compared to its key regional peers (such as the euro), the pound is relatively weaker. Unfortunately, Brexit-related risks and relatively weaker economic growth continue to weigh on GBP. Turning to the latest Brexit news, the British government is proposing "mutual recognition" as a means to preserve financial services access to the EU. According to the  Financial Times, the proposal calls for the UK and the EU to recognize each other's regulatory regimes as equivalent at the point of Brexit. Any future divergences would be monitored by an independent mechanism. The proposal is likely to be contentious, given that Michel Barnier has repeatedly ruled out access to the single market unless the UK accepts conditions including the free movement of people. Our short-term outlook on the pound is neutral, while our medium-term outlook is bullish.  

GBP/USD is currently above 1.4120. EUR/GBP is flat, with the exchange rate above 0.8870. The pound is flat against the Australian dollar and the Canadian dollar. GBP/AUD is currently above 1.7720, while GBP/CAD is above 1.7610.

Looking at UK economic data this week, traders will be watching upcoming inflation and retail sales figures. The consumer price index (3% vs. 2.9% expected) was ahead of expectations. The retail price index (4% vs. 4.1% expected) were slightly below estimates while the producer price index (4.7% vs. 4.2% expected) was ahead of expectations. Later today, we'll see retail sales growth. Expectations remain low, given recent weakness in UK consumer spending. Last week, the Bank of England signaled a positive economic outlook while Markit/CIPS services PMIs were below expectations. 

Updated 

Canadian dollar daily update

The Canadian dollar is weakening today, as the global stock market rebound runs out of steam. In general, riskier assets such as stocks and commodities are doing poorly today, which is driving down the Canadian dollar. CAD is currently selling off against safe haven currencies such as the US dollar and the Japanese yen. The loonie is flat against the euro and the British pound. The US dollar is strengthening today, alongside most global government bonds. Safe haven assets such as the US dollar and government bonds typically rally when risk sentiment is weak. Turning to NAFTA discussions, top US and Mexican officials are cautiously optimistic that NAFTA can be renegotiated. The seventh round of negotiations will take place in Mexico City starting on February 25. As Mexican presidential elections are set to take place in July, there is a likelihood that talks will have to be postponed until later this year. Our short-term outlook on the Canadian dollar is neutral, while our medium-term outlook remains bullish.       

The USD/CAD exchange rate is currently above 1.2540. The euro is flat against the Canadian dollar, with EUR/CAD currently above 1.5590. The pound is also flat against the Canadian dollar, with GBP/CAD trading above 1.7570.

This is a very light week for economic data from Canada. Manufacturing sales figures missed expectations by a significant degree (-0.3% vs. 0.2% expected). Last week, trade balances and changes in employment were below expectations. 

Updated 

British pound to Canadian dollar Outlook

Short term outlook
Bullish

As the pair strengthens, we are upgrading GBP/CAD to bullish. The pair is now trading within a normal range. Our analysis is based on a range of technical indicators looking at a daily chart of the pair.  

Medium term outlook
Bullish

As the pound strengthens, we are now bullish on GBP/CAD. Note that the pair is trading within a normal range. This is based on various technical indicators looking at a weekly chart. 

Updated 

British pound analysis

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British pound still looks like a good deal

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‘Euroboom’ becomes the consensus favorite: COT Report

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Published 

Canadian dollar analysis

Canadian dollar forecast: in vogue following better data in COT report

When will the Canadian dollar rebound? We take a closer look at the Canadian dollar future forecast and what the latest Commitments of Traders report says about the currency. Bank of Canada remains cautious - impacting trader optimism, but better data has us rethinking an earlier prediction.

Published 

BoC preview: binary odds

Expectations for today’s Bank of Canada rate decision are low – consensus expects rates to be maintained at 1%. Thus the real driver for the currency will be in the Bank’s statement. Last October, the BoC said that the “Governing Council will be cautious in making future adjustments in the policy rate”. Markets focused on the word “cautious”, believing that the outlook for further hikes in 2017 w…

Published 

CAD forecast: the coming economic downturn in Canada

CAD forecast: forex investors have reason to be cautious about the Canadian dollar. Changes in crude oil and real estate prices indicate a coming reversal of fortune.

Published 

Economic calendar

Economic Calendar by TradingView