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GBP/CAD PRICE ANALYSIS: POUND HITS 1.7700 VS CAD ON STRONG UK DATA

by Glen Frybarger - Content Strategist, Chicago KEY POINTS - GBP/CAD hit a multi-year high above 1.7700 - British pound has strengthened from strong GDP data and a new political ruling party - An unexpected rise in Canadian inflation has hampered CAD prices as traders anticipate rate cuts

GBP/CAD PRICE HITS 1.7700 FOR FIRST TIME SINCE 2021 The GBP/CAD exchange rate has now closed above 1.7700 in successive days, a milestone it hasn't seen since 2021. In the three years prior to this, the pound-loonie pair mainly fluctuated between 1.6000 and 1.7500—with a brief drop all the way below 1.5000 in 2022. This breakthrough highlights a significant shift in the forex market dynamics between the British pound and the Canadian dollar, offering potential opportunities for forex traders. WHY IS BRITISH POUND GETTING STRONGER? The British pound has been outperforming many major currencies due to robust UK economic data and recent political changes that saw the Labour party take power for the first time in over a decade. The latest GDP figures exceeded expectations by 0.2%, reflecting underlying economic strength. This performance, combined with political stability post-election, has bolstered the pound's position in the forex markets. WHY IS CANADIAN DOLLAR GETTING WEAKER? Conversely, the Canadian dollar has shown signs of weakening, impacted by rising unemployment which reached 6.4% in June for the first time since January 2022. This development has stirred concerns among CAD traders about potential interest rate cuts by the Bank of Canada, aimed at stimulating the economy but potentially devaluing the currency in the forex market. WILL GBP/CAD BREAK THROUGH 1.8000? While the GBP/CAD has surged to 1.7700 recently, it remains to be seen whether it will surpass the 1.8000 level, last seen in 2018. Historical trends show that the pair has reached as high as 2.0000 in early 2015, pre-Brexit, but only briefly stayed above 1.8000 in 2018. The current strength of the British pound against the weakening Canadian dollar might just push it beyond this threshold once again.

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Publication date:

2024-07-16 00:19:36 (GMT)

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