GBP/CAD Outlook:
Bearish, as the rate is below its recent average and near recent lows, pressured by UK political uncertainty.
Key drivers:
• Rate gap: The Bank of England is adopting a more dovish policy, which contrasts with the Bank of Canada's steadiness in rates, creating a weakening bias for the pound.
• Risk/commodities: A rise in oil prices is providing support to the Canadian dollar, aligning with its status as a key oil exporter.
• One macro factor: Ongoing UK political instability is restricting GBP movement, leading investors to adopt a cautious approach.
Range:
The GBP/CAD is likely to hold within its recent stable range as it tests lower levels, moving around its current position.
What could change it:
• Upside risk: A sudden positive shift in UK political stability could bolster the GBP.
• Downside risk: A significant drop in oil prices could weaken the CAD, putting additional pressure on GBP/CAD.
