The Pound Canadian Dollar (GBP/CAD) exchange rate has recently experienced fluctuations, with a notable decline of 1.0% in November. This downturn is attributed to the Canadian Dollar's (CAD) outperformance, which analysts link to Donald Trump's recent U.S. election victory, suggesting that the CAD may benefit from anticipated higher U.S. growth. Currently, the GBP/CAD exchange rate is around 1.7614, with technical analysis indicating a potential bearish trend. Key support levels have been identified at 1.7748 and 1.7696, suggesting that the market is closely monitoring these thresholds for further movements. [d87eed38]
However, significant developments have emerged that could further impact the CAD. On February 3, 2025, the Canadian dollar fell to a 21-year low after President Trump imposed a 25% tariff on U.S. imports from Canada, effective February 4. This move caused the USD/CAD exchange rate to peak just below 1.4800 before correcting to 1.4680, while the GBP/CAD exchange rate reached 2025 highs around 1.8180. Analysts at ING noted potential upside risks for USD/CAD, predicting a move to 1.50 due to the tariffs and inflationary pressures in the U.S. [ecca7a5d]
In retaliation, Canada announced 25% tariffs on C$30 billion of U.S. goods, with an additional C$125 billion planned within 21 days. This escalation in trade tensions has raised concerns about recession risks in Canada, especially as the Bank of Canada has already cut rates by 200 basis points, with further cuts likely on the horizon. Approximately 75% of Canadian exports go to the U.S., making the economy particularly vulnerable to these developments. [ecca7a5d]
As the market navigates these developments, upcoming economic data is expected to play a crucial role in shaping the exchange rate. Canadian inflation data is set to be released on November 19, with CIBC forecasting a monthly increase of 0.2%, which is below consensus expectations. Meanwhile, UK inflation is anticipated to rise to 2.2% year-on-year, prompting speculation that the Bank of England may consider rate cuts if the inflation data comes in weak. [d87eed38]
Overall, while the Pound has faced challenges against the Canadian Dollar, the evolving economic indicators and political developments may open the door for a recovery in the week ahead, despite the looming impacts of U.S. tariffs. [d87eed38]