Author, Mike Smith
Find out what’s happening with the GBP to CAD exchange rate as well as the market outlook and forecasts for 2025.
Will the Pound get stronger against the Canadian Dollar?
The Pound has gained over 5% against the Canadian Dollar in 2024. That’s a large move for a major currency pair like GBP/CAD. In December 2024, the GBP-CAD rate is sitting just near 6 1/2-year highs.
Since the Pound hit a decade-low against the Canadian Dollar in 2022, the GBP/CAD rate has staged a remarkable turnaround and is now close to the highest levels it’s been since Brexit in 2016.
Here’s a bit of context as to what’s been happening with GBP to CAD.
The GBP/CAD rate got sold off heavily in 2022 hitting a decade low in September 2022. Since then, the GBP/CAD rate has gained over 20% in value.
The main reason for the surge is the interest rate gap.
In the UK, the base interest rate is 4.75% compared to only 3.25% in Canada.
While a 1.5% gap might not sound like much, bear in mind the Bank of England typically moves rates in tiny 0.25% increments.
So doing the math, it would take 6 rate cuts for the UK to converge with Canada – that’s a tremendous difference.
Higher interest rates attract foreign investment, which then strengthens a currency.
Whereas lower interest rates generally weaken a currency.
So the UK’s far superior interest rate has lifted the GBP/CAD exchange rate.
But what about 2025?
Futures markets indicate the Bank of Canada will make 2 cuts in 2025 compared to 2-3 cuts by the Bank of England.
Put simply, the UK might close the gap a little, but not much.
Timing of the rate cuts is also a factor and needs to be considered in GBP/CAD forecasts.
The Bank of Canada is expected to make their 2 cuts in the first half of 2025, whereas the Bank of England is forecast to take a more gradual approach over the year.
Pound to Canadian Dollar Forecast 2025
We forecast the GBP/CAD rate will be $1.88 by June 2025 and then fall in the second half of the year to $1.76 by December 2025.
This is based on the expected interest rate path for both the UK and Canada, which we see as the primary driver of GBP/CAD exchange rate predictions. Other factors such as fiscal policy, geopolitical forces, commodity prices and risk sentiment will also play a role.
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What is a good GBP to CAD rate?
Anyone looking to exchange Pounds into Canadian Dollars, or vice versa, is left with the problem of when to exchange their money – now or in the future?
If you are a buyer of Canadian Dollars, you want a high GBP-CAD rate.
If you are a buyer of Pounds, you want a low GBP-CAD rate.
The easiest way to tell if the GBP to CAD rate is good or bad is to compare it to historical exchange rates.
In my view, I wouldn’t go back much further than 10 years.
Once you start looking at even long-dated charts, you’re digging into data that is likely to be no longer relevant. Every decade has its specific events.
Over the last 10 years, the average GBP/CAD rate isn’t much different at $1.74 (source: Bank of England).
If the GBP to CAD rate is above its long-term average of $1.74, you can consider it a good rate for buyers of Canadian Dollars.
Conversely, if the GBP to CAD rate is below $1.74, it can be considered a bad rate.
It’s a simple yardstick to use.
The further the exchange rate is away from its average, the more extreme the move.
The GBP/CAD exchange rate can stray a long way from the average.
Over the past 10 years, the highest GBP/CAD rate was $2.0847 on 11 December 2015 – just before Brexit.
The lowest GBP/CAD rate in the past 10 years was $1.4707 on 28 September 2022 – the Pound fell considerably following the Liz Truss mini-budget fiasco.
There’s about a 30% swing from the high to the low!
Even over a regular week, you see swings of 2-4% quite frequently.
Bear in mind even small moves make a big financial difference to someone exchanging money.
That’s why keeping a close eye on the GBP to CAD rate is important.
GBP to CAD weekly forecasts
Forecasting exchange rates over a weekly period is a lot less complicated than longer timeframes.
Over a week, there is a smaller number of factors that can influence the GBP to CAD exchange rate.
Most of the important economic news is scheduled in advance. It allows people to see if anything critical is on the horizon.
One easy way anyone can keep tabs on upcoming news is to look at an economic calendar. I quite like the calendar by DailyFX because it’s got a simple, clear layout.
As currency brokers, we follow the economic calendar closely as it gives us a heads-up on potential risks.
In addition to economic news, you can also look at the GBP to CAD exchange rate for near-term price patterns.
Using price patterns to predict exchange rates is called technical analysis.
While there are many forms of technical analysis, I find the GBP/CAD technical analysis overview provided by investing.com useful.
Note – the page defaults to hourly analysis, but you can change the period to weekly or monthly to get a different perspective.
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Need some guidance on exchange rates?
Getting a good GBP to CAD exchange rate can make a big financial difference to you.
As I mentioned, you only have to take a quick look at a GBP to CAD chart to see plenty of big swings up and down.
It’s worth being proactive about.
At Key Currency, we believe in helping our clients make the most of their money.
Unlike an impersonal bank or faceless online app, we will help you through the whole money transfer process.
As part of our service, we will assist you with your payment set-up, guide you on current rates and market trends, and keep you informed from start to finish.
We can discuss with you and agree on the right time to exchange your money by understanding your requirements and taking advantage of favourable rate movements.
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Key Currency is also regulated by the FCA as an Authorised Payment Institution (No. 753989). Therefore, all money transfers are conducted through safeguarded client accounts.
Get a free quote below if you want to find out more about us or get our latest GBP to CAD rate.