Best GBP to Canadian Dollar Exchange Rate in Months

We are now seeing the best conversion rate on the British pound sterling (GBP) to Canadian Dollar currency pairing since the start of April.

The stellar rise in the GBP-CAD exchange rate that characterised 2013 ran into resistance towards the end of January.

The rate has been unable to break 1.86, indeed recently there was the threat of a deeper pullback towards the 1.80 level.

However, April has seen a steady rise in the rate and we are now currently seeing some of the best levels for a while. Wednesday's policy outcome at the Bank of Canada has been particularly bearish for the CAD.

However, be warned, it will take a fundamental shift in global investor appetite to draw the GBP-CAD north of the 1.86 level and at Pound Sterling Live we are sceptical that this could occur anytime soon.

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What is the outlook for the Canadian dollar?

When forecasting potential future direction in the pound / Canadian dollar exchange rate it must be kept in mind that it is best to watch for direction from the headline USD vs CAD pair.

When the USD-CAD starts to rally we reckon the GBP-CAD may finally be able to crack the ceiling at 1.86. Until such a time we expect the going to be tough.

The CAD has rebounded against the dollar over the past month, moving below 1.10, after peaking above 1.12. It has also rallied against sterling and the euro.

"The loonie’s rise reflects the general rebound in higher-yielding currencies, over the past few weeks," say Lloyds Banking Research, "Canadian interest rates at 1% are hardly high, but are above those on offer in the US."

Domestic economic news has been mixed, although there have been signs of economic growth picking up after a very cold winter.

However, the Bank of Canada continues to show concern about low inflation and has indicated it is no hurry to tighten monetary policy.

"Given this, we doubt the rise in the CAD will be sustained. With Canadian interest rates not expected to rise before those in the US, the CAD is expected to depreciate against the USD. We forecast USD/CAD at 1.13 at end 2014," say Lloyds.

Lloyds reckon that the GBP-CAD is in fact at its best levels of 2014.

It is all downhill from here with 1.81 being struck by the year end.

At Pound Sterling Live we believe if there is any deterioration in the exchange rate it will be a slow one, nevertheless we believe these are decent levels to transact at.