Currency News

Daily Exchange Rate Forecasts & Currency News

GBP to CAD Exchange Rate Struggles to Advance as Canadian Economic Outlook Remains Strong

November 20, 2020 - Written by James Fuller

Hopes for a UK-EU Brexit deal to be announced soon are keeping Sterling buoyant, but the British Pound to Canadian Dollar (GBP/CAD) exchange rate has struggled to sustain notable gains. Investors continue to find the Canadian Dollar appealing amid Canada’s economic outlook and recovering oil prices, which is limiting the pair’s potential for gains and leaving investors looking ahead to what could be a major week for the Brexit process.

Since opening this week at the level of 1.7329, GBP/CAD has seen mixed movement. GBP/CAD briefly slipped to a weekly low of 1.7217 at the beginning of the week, but quickly rebounded and spent most of the week fluctuating close to the week’s opening levels.

In the middle of the week, GBP/CAD briefly touched on a high of 1.7403 - the best level for the pair in two and a half months since the beginning of September.

The pair was unable to hold those highs though, and at the time of writing on Friday GBP/CAD trends near the level of 1.7324 - right around the week’s opening levels.

GBP Exchange Rates Avoid Losses amid Brexit and Retail Sales Hopes



The Pound remained fairly appealing over the past week overall. This was due largely to market optimism that the UK and EU were on the cusp of finally reaching a deal on Brexit.

While no Brexit deal was announced over the week as initially hoped, optimism that a deal will still be announced soon is keeping the Pound resilient and helping it to avoid losses against major rivals.

Some analysts believe the Pound’s potential for further gains is limited due to concerns that any Brexit deal could be barebones. However, expectations for a deal are still keeping Sterling strong.

According to Jane Foley, Head of FX Strategy at Rabobank:

‘For some weeks GBP has been supported by the view that some kind of deal will be announced this month. This is still the favoured outlook, though scope for any relief rally is set to be limited by the likelihood that any deal will be a skeleton one’


Today’s UK data had a mixed impact on the Pound, which is also limiting the Pound’s potential for gains against the Canadian Dollar.

While UK retail sales results came in well stronger than forecast at 5.8% year-on-year, the latest public sector net borrowing was much lower, causing concern about how wages and consumer confidence could be hit as the pandemic continues to unfold.

CAD Exchange Rates Remain Appealing on Canadian Outlook and Oil Prices



The Canadian Dollar remains fairly appealing overall, despite the worsening coronavirus pandemic outlook in the US and Canada.

The Canadian Dollar has been resilient against the Pound’s strength this week and has largely avoided losses. This is due to hopes that Canada’s economy will continue to perform well even amid the coronavirus second wave.

This sentiment was supported this week by news that ratings agency Moody’s was upholding Canada’s Aaa credit rating.

Moody’s said:

‘The risk of a material, long-lasting deterioration to Canada’s economic or fiscal strength is low, including from the coronavirus shock,

Despite a sharp deterioration in the government’s fiscal position this year, Canada’s long-standing political consensus on fiscal health will lead to gradual fiscal consolidation after the pandemic subsides.’


On top of this, the Canadian Dollar’s appeal is also being boosted by the recent general strength of oil prices. Oil is Canada’s biggest export and CAD is often correlated to oil price movement.

While oil has slipped slightly from best levels in recent sessions, the commodity is still on track for its third weekly gain as it is boosted by coronavirus vaccine hopes.

GBP/CAD Exchange Rate Forecast: Focus on Brexit amid Quieter Data Week



Next week’s economic calendar will be quieter. However, markets increasingly speculate that it could be a huge week for the Brexit process.

Bets of a UK-EU Brexit deal of some kind being announced early next week persist, and officials continue to take an optimistic tone on talks. While the latest round of negotiations was delayed due to coronavirus concerns, markets remain hopeful that a deal is around the corner.

As a result, developments over Brexit are likely to dominate GBP/CAD movement in the coming week.

If a deal continues to be seen as likely or is even announced, the Pound is more likely to sustain gains or advance further as downside risks would soften.

On the other hand though, if uncertainty over a deal worsens the Pound could shed recent strength.

This could make it easier for a resilient Canadian Dollar to push GBP/CAD lower.

The Canadian Dollar will continue to be influenced by oil prices. If oil prices climb again on coronavirus vaccine hopes, the Canadian Dollar is likely to strengthen too.

Upcoming UK PMI projection data could cause some movement on Monday, but overall the Pound to Canadian Dollar exchange rate will remain focused on Brexit developments.
Like this piece? Please share with your friends and colleagues:

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.


TAGS: Pound Canadian Dollar Forecasts

Comments are currrently disabled