Canadian Dollar to Advance on Sterling Again This Year, Desjardins Forecasts

The Pound-to-Canadian-Dollar rate has already seen the steepest losses of all British currency pairs but it's likely to fall even further in the months ahead as Europe largely sits out a global currency riposte to the U.S. Dollar, according to new forecasts from Canada's Desjardins. 

The Pound-to-Canadian-Dollar rate clung to a minor fraction of its earlier gains at the close Friday but is again under increasing pressure from a resilient Loonie that's been bolstered by the joint-highest interest rate in the developed world, although price action will be driven more from the Sterling side of the equation in the coming days.

The Canadian Dollar went from near-zero to hero Friday after the December jobs report appeared to suggest the previous dire reading of the employment situation was just a blip that should remain confined to the rearview mirror, which has come as balm to the interest rate outlook.

Analysis from Swiss investment bank Credit Suisse shows that the Canadian Dollar is unlikely to receive the support from rising oil prices that might have been the case in the past.

The Canadian Dollar is at a crossroad from which it could head in either direction although local analysts say this week's price action will be key to the medium-term outlook for the Loonie, which rose against Pound Sterling and most other major rivals Tuesday.

The Pound-to-Canadian-Dollar rate declined in the opening week of the New Year as the Loonie advanced against all major rivals other than the Japanese Yen, although the outlook for the week ahead sees the exchange rate starting off in neutral ground even though the charts are arguing for further losses. 

The Canadian Dollar put in a chequered performance against major rivals in the final session of 2019 Tuesday but remained the best performing major currency of the year, although analysts at Scotiabank say the Loonie could be running out of road. 

The Canadian Dollar has been humbled this holiday week with prior advances against the U.S. Dollar and Pound Sterling brought to a halt after weakness in the consumer sector helped drive the economy to a surprise October contraction, likely stirring unease at the Bank of Canada (BoC)