The Pound to Canadian Dollar exchange rate traded sideways at the start of the week as investors awaited interest rate decisions from both the Bank of England and the Bank of Canada.
Pound to Canadian Dollar (GBP/CAD): 1.82225 (+0.32%)
Euro to Canadian Dollar (EUR/CAD): 1.5738 (+0.36%)
Dollar to Canadian Dollar (USD/CAD): 1.36791 (-0.25%)
DAILY RECAP:
The Pound (GBP) traded with a softer tone at the start of the week as investors adopted a cautious stance ahead of the Bank of England’s upcoming policy decision.
Sterling slipped against several stronger peers after economists at Goldman Sachs predicted the BoE could still deliver two interest-rate cuts in 2026 despite the recent surge in global energy prices.
The bank forecast potential rate reductions in July and November next year.
This outlook contrasts with current money-market pricing, which suggests the BoE may instead deliver a modest interest-rate increase over the coming year.
The divergence in expectations created some uncertainty for Sterling and limited demand for the UK currency in early trading.
Meanwhile, the Canadian Dollar (CAD) faced modest selling pressure as oil prices pulled back from recent highs.
The move lower in crude prices followed reports that limited shipping traffic had resumed through the Strait of Hormuz.
Iran indicated that the waterway was “open, but closed to our enemies”, allowing a small number of vessels from countries including Pakistan, India and Turkey to pass through.
The partial reopening of the key energy route eased concerns about an immediate supply shock, leading oil prices to drift lower and weighing on the commodity-linked ‘Loonie’.
Additional data showed Canadian inflation slowed more than expected in February, easing from 2.6% to 2.3%.
However, the impact on the Canadian Dollar was limited as markets focused on the Bank of Canada’s upcoming interest rate decision and ongoing volatility in global energy markets.
Near-Term GBP/CAD Forecast: Central Bank Decisions and Oil Prices in Focus
Looking ahead, economic data is relatively limited for both the UK and Canada in the early part of the week.
As a result, broader market sentiment and movements in oil prices may continue to drive the Pound to Canadian Dollar exchange rate.
If shipping activity through the Strait of Hormuz increases and oil prices fall further, the Canadian Dollar could face additional pressure.
Conversely, any renewed disruption to energy infrastructure in the Middle East could send oil prices higher and support the ‘Loonie’.
Meanwhile, Sterling may remain subdued ahead of the Bank of England’s policy decision later in the week.
Markets will watch closely for any guidance from policymakers regarding how rising global energy prices may influence the central bank’s outlook for interest rates and inflation.
