Pound To Canadian Dollar Price Forecast: Loonie Falls As Oil Prices Tumble

The Pound to Canadian Dollar (GBP/CAD) exchange rate surged to a two-month high last week as falling oil prices, triggered by the US-Iran ceasefire, weighed heavily on the commodity-linked ‘Loonie’.

WEEKLY RECAP:

The Canadian Dollar (CAD) came under significant pressure as oil prices dropped sharply following the announcement of a US–Iran ceasefire.

As a major oil exporter, Canada’s currency is closely tied to crude price movements, leaving the ‘Loonie’ vulnerable to the sharp decline in energy markets.

Oil prices fell steeply through the middle of the week as fears of supply disruption through the Strait of Hormuz eased.

This placed CAD under heavy selling pressure.

While oil prices stabilised and edged higher later in the week amid doubts over the ceasefire’s durability, the Canadian Dollar struggled to fully recover.

A mixed domestic labour market report further limited CAD’s rebound.

Meanwhile, the Pound (GBP) experienced a volatile but ultimately supportive backdrop.

Sterling initially struggled amid thin trading conditions over the Easter period and weaker UK services data.

As the week progressed, movements in GBP became increasingly linked to fluctuations in UK bond yields.

The ceasefire announcement drove a sharp fall in borrowing costs, supporting Sterling, although gains were capped as markets trimmed Bank of England rate hike expectations.

Renewed concerns over the ceasefire later in the week pushed gilt yields higher again, limiting further upside in the Pound.

GBP/CAD Forecast: Soft GDP Print to Weigh on Sterling?

Looking ahead, the Pound to Canadian Dollar exchange rate may come under pressure if upcoming UK GDP data confirms weak economic growth.

Signs of subdued activity could weigh on Sterling and raise concerns about the resilience of the UK economy.

At the same time, oil price movements will remain a key driver for CAD.

If the ceasefire shows signs of breaking down, rising crude prices could support the ‘Loonie’.

Conversely, if geopolitical tensions ease further and oil prices fall again, the Canadian Dollar may remain under pressure.