Pound Canadian Dollar Exchange Rate Slips but Remains Bullish Overall
The Pound (GBP) continues to see broad bullishness this week, as the Pound Canadian Dollar (GBP/CAD) exchange rate touched a new high this morning. The Canadian Dollar (CAD) is not strong enough to avoid losses against the surging Pound.
Despite some resilience in the Canadian Dollar, GBP/CAD continues to climb in recent sessions. Last week saw GBP/CAD climb from 1.75 and gain over a cent, closing the week in the interbank region of 1.76.
This week’s movement has been even more bullish. This morning, GBP/CAD touched on a high of 1.78, the best level for the pair since March 2020.
While GBP/CAD has tumbled from that high, it is still high in the interbank region of 1.77. Sterling may even continue to rally, despite concerns from analysts that it could see a drop in correction soon.
Pound (GBP) Exchange Rates Defy Expectations on Continued Surge
Despite the UK government’s lockdown easing roadmap being more cautious than many investors expected, the Pound continues to capitalise on the market mood this week.
Hopes for the UK to have vaccinated most civilians and have mostly left lockdown by summer led to more confident speculation that the UK will be one of the first major economies to recover from the coronavirus pandemic.
According to Lars Sparreso Merklin, Senior Analyst at Danske Bank:
‘Seemingly GBP is benefiting from a positive vaccine rollout and short-term Brexit adjustment problems disappearing, which also from a relative rates perspective is supporting GBP,’
Canadian Dollar (CAD) Exchange Rates Struggle to Rebound as Upside Runs out of Steam
Against other major currencies, the risk and commodity-correlated Canadian Dollar has been strong in recent weeks. Commodities including oil have seen surges in demand due to coronavirus pandemic recovery hopes.
Yesterday saw a speech from Bank of Canada (BoC) Governor Tiff Macklem. He said he expected a solid rebound in Canada’s economy in the coming months, which means the Canadian Dollar’s outlook is strong overall.
While the Canadian Dollar benefitted from commodity and outlook strength though, it has been unable to hold its ground against the surging Pound lately.
What’s more, some analysts believe CAD is overbought, which is limiting its potential for recovery against Sterling as well.
Pound Canadian Dollar (GBP/CAD) Exchange Rate Could See Further Gains if CAD Pulls Back
The Pound to Canadian Dollar exchange rate is slipping from its best levels today, but the pair may be in for even further gains in the coming sessions.
While some analysts say the Pound rally is running out of steam, other analysts suggest the Canadian Dollar may also be able to pull back.
According to Analysts at Credit Agricole CIB Research:
‘we also believe that the recent CAD rally has captured most of these positives with our analysis of positioning and long-term fair value suggesting that the CAD is looking a bit overbought and overvalued.’
The Canadian Dollar may be more likely to hold its ground if upcoming Canadian wages and PPI data impresses investors.
However, that aside the Pound Canadian Dollar (GBP/CAD) exchange rate’s next direction could simply depend on whether the Pound or Canadian Dollar is sold from recent highs first.