Author, Mike Smith
A GBP to CAD forecast predicts whether the exchange rate will be higher or lower in the future.
Exchange rate forecasts can help you decide when to exchange your money.
Will the Pound get stronger against the Canadian Dollar?
The Pound has gained against the Canadian Dollar in both 2023 and 2024. Momentum remains positive. In July 2024, the GBP-CAD rate is sitting just near 5-year highs.
Given the Pound hit a decade-low against the Canadian Dollar in 2022, it’s a remarkable turnaround.
Here’s a bit of context as to what’s been happening with GBP to CAD.
Throughout much of 2022, the Pound devalued against the Canadian Dollar. The UK was facing political upheaval and Canada was benefiting from a post-Covid commodities boom. Since then the Pound has recovered considerably.
Taking a broader perspective, the current GBP/CAD rate is above its long-term average of 1 Pound to $1.74 Canadian Dollars.
When you look at a 10-year chart, the GBP/CAD rate is really back to normal levels rather than at an extreme.
The forecast 2024 economic growth is 0.4% for the UK and 1% for Canada (based on OECD numbers). That doesn’t look like an important driver at present.
One differentiating factor is the Bank of Canada has begun to cut interest rates, whereas the Bank of England is sitting tight for now.
Generally, lower interest rates will weaken a currency.
The Central Bank of Canada is expected to carry out a “phase of rate cuts” over 2024 and 2025.
The picture is less clear for the Bank of England. However, with UK inflation now back to target levels of 2% we think rate cuts are coming for the UK too. This is expected to begin in the summer or autumn of 2024.
Forecasting the GBP to CAD exchange rate is more about the likely future direction rather than coming up with a precise number at a particular point in time.
If you are reading some precise forecast online, I can assure you it’s pure fantasy. You will notice the methodology is either not mentioned at all or deliberately vague.
I do, however, appreciate that timing matters.
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Why exact GBP to CAD forecasts are fantasy
If you’ve been searching for an exact GBP to CAD forecast, you will have noticed that few websites provide exact forecasts.
There is a simple reason for this.
Exchange rates are very difficult to forecast to a precise level.
The more precise the forecast, the less I would trust it.
Why?
Daily, many economic and political factors influence currencies, like the British Pound and Canadian Dollar.
And beyond the news, you also have speculators actively trading the GBP-CAD exchange rate throughout the day.
It’s why you never see the GBP to CAD exchange rate sit still for long. It moves every 2-3 seconds.
The idea that anyone could bring all the fundamental factors together, forecast them accurately, weigh them accordingly, and then also anticipate the trading flows of millions of speculators around the world, and outpops a precise exchange rate forecast in a week, month, or year…well, that’s just pure fantasy.
I’m not saying you won’t come across any exact GBP to CAD forecasts.
But the people that make them are either:
- Seeking publicity
- Simply extrapolating the present
- Deluded
Most analysts fall into the first category.
Most economists fit the second category.
And most market oracles are deluded or flogging some trading product.
I appreciate anyone looking to exchange Pounds into Canadian Dollars, or vice versa, is still left with the problem of when to exchange their money – now or in the future?
It’s a fair question.
But instead of finding someone with a magical crystal ball, I would suggest using a common-sense approach to make the most from exchange rate movements.
What is a good GBP to CAD rate?
The GBP to CAD exchange rate tells you what each British Pound is worth in Canadian Dollars.
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.
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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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