The Pound to Canadian Dollar (GBP/CAD) exchange rate weakened at the start of the week as rising oil prices supported the ‘Loonie’ while renewed UK political uncertainty weighed on Sterling.
At the time of writing, GBP/CAD was trading around CA$1.8602, down 0.2% on the day.
Pound to Canadian Dollar (GBP/CAD): 1.86555 (+0.29%)
Euro to Canadian Dollar (EUR/CAD): 1.61007 (-0.01%)
Dollar to Canadian Dollar (USD/CAD): 1.36662 (-0.13%)
DAILY RECAP:
The Pound (GBP) softened at the start of the week as renewed political uncertainty unsettled Sterling investors.
Although the Pound initially stabilised following last week’s local election results, fresh speculation surrounding Prime Minister Keir Starmer’s leadership weighed on sentiment.
Current councillor changes show Labour down 202 seats, the Conservatives down 61, while Reform UK added 270 councillors. The Liberal Democrats gained 29 seats and the Greens added 23.
Reports that some Labour MPs were discussing the possibility of replacing Starmer contributed to renewed pressure on Sterling.
Investors also remained concerned that increased political instability could weaken confidence in the UK’s fiscal outlook and lead to higher government borrowing, pushing UK gilt yields higher.
Meanwhile, the Canadian Dollar (CAD) strengthened as rising oil prices supported the commodity-linked currency.
Crude prices climbed after tensions between the US and Iran escalated again over the weekend.
US President Donald Trump criticised Iran’s latest peace response, while renewed drone strikes and warnings of further conflict in the Gulf added to concerns surrounding global energy supplies.
The resulting rise in oil prices helped underpin demand for the ‘Loonie’.
GBP/CAD Forecast: Politics and Oil Prices Remain Key Drivers
Looking ahead, the absence of major UK and Canadian economic data could leave GBP/CAD driven primarily by political developments and oil market movements.
For Sterling, investors are likely to remain focused on Westminster.
Any escalation in speculation surrounding Prime Minister Keir Starmer’s leadership could weigh further on the Pound, while signs of political stability may help Sterling recover.
For the Canadian Dollar, oil price dynamics are expected to remain crucial.
Further geopolitical tensions in the Middle East could support crude prices and strengthen CAD, while renewed optimism surrounding diplomatic negotiations may place pressure on the ‘Loonie’.
