CAD/GBP Outlook:
Slightly positive, but likely to move sideways as CAD trades just above its recent average and is near recent highs.
Key drivers:
• Rate gap: The Bank of Canada maintains a cautious rate, while the Bank of England is showing a more dovish approach, which is supporting the CAD against the GBP.
• Risk/commodities: The recent uptick in oil prices, which are significantly above average, has bolstered the CAD, solidifying its role as a commodity-linked currency.
• One macro factor: Growing political uncertainty in the UK is weighing on the GBP, leaving traders cautious about their positions as they await economic data.
Range:
Expect CAD/GBP to hold steady within its recent range as it has traded in a consistent band.
What could change it:
• Upside risk: A substantial increase in oil prices could further strengthen the CAD.
• Downside risk: A surprising shift in UK economic data could pressure the GBP, impacting the CAD/GBP rate.