Pound-Canadian Dollar Forecast: BofA Sees Near-Term CAD Weakness

Modified: Thursday, 6 August 2026 22:31 BST - Written by David Woodsmith

STORY LINK Pound-Canadian Dollar Forecast: BofA Sees Near-Term CAD Weakness

The Pound to Canadian Dollar exchange rate (GBP/CAD) slipped to around 1.8856 on Thursday evening, trading close to its August low as firmer oil prices and caution ahead of Canada’s employment report supported the Canadian currency.

Sterling struggled to benefit from a less severe contraction in UK construction, while bank forecasts remain divided over whether the Loonie can extend its recent recovery.

GBP/CAD Forecasts: BofA USD/CAD call puts 1.94 in view

Bank of America expects USD/CAD to rise to 1.44 in September before easing to 1.43 in December and falling towards 1.38 by September 2027.

With GBP/USD trading close to 1.3460, the September USD/CAD target would imply a GBP/CAD rate around 1.94 if Sterling-Dollar remained unchanged.

This is an implied cross-rate calculation rather than a direct Bank of America forecast for GBP/CAD.

According to BofA; “We remain comfortable with our forecast of 25bp hikes at each of the remaining three Fed meetings this year.”


The bank added; “Warsh was dovish. We remain hawkish.”

GBP/CAD was quoted at 1.8856, down around 0.2% from last Friday’s close and close to the August low of 1.8851.

The pair has struggled to sustain moves above 1.8950 after reaching a July high around 1.9044.



Scotiabank takes a more constructive short-term view of the Canadian Dollar and expects renewed pressure on USD/CAD.

According to Scotiabank; “A low close on the week suggests the USD rebound from mid-July is reversing and more pressure is likely on the upper 1.39s.”

ING is less confident that the Canadian currency can force a decisive breakthrough.

The bank commented; “We still think USMCA-related risk premium can be added throughout 3Q and don't expect a return below 1.40 in the next couple of months.”

CIBC also expects limited near-term movement.

According to CIBC; “We expect USD-CAD to remain very rangebound as trading activity over the summer months tends to die down.”

The Canadian economy has delivered stronger signals in recent weeks, with second-quarter growth estimated at an annualised 3.4% and June’s trade surplus widening to a four-year high of C$3.86bn.

The services PMI remained below the 50 growth threshold at 49.1 in July, however, leaving Friday’s employment report as an important test of the recovery.

Employment is forecast to increase by 15,000, with unemployment expected to remain at 6.5%.

Monex Europe remains positive on the medium-term Canadian Dollar outlook, but warned; “We still look for loonie appreciation in the medium term, but maintain that a sustained break below 1.40 requires calmer geopolitics.”

Oil prices provided additional support on Thursday, rising 2.8% to around $77.32 a barrel.

Sterling’s own interest-rate support remains uncertain despite markets pricing close to one Bank of England increase by year-end.

ING commented; “We remain pretty bearish on Sterling, primarily because we think the market pricing for the Bank of England is way too hawkish.”

A stronger Canadian employment report and sustained oil gains could push GBP/CAD below its August low.

Weak hiring or renewed doubts over the Canadian trade outlook could instead lift the pair back towards 1.8950, while BofA’s more hawkish Federal Reserve view leaves a larger medium-term upside risk if USD/CAD climbs towards 1.44.

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TAGS: Pound Canadian Dollar Forecasts