Pound-to-Canadian Dollar Week Ahead Forecast: Still Bullish

Image © Adobe Images

The pound to Canadian dollar exchange rate (GBP/CAD) extends last week’s recovery at the start of the new week, rising to 1.8706 and placing key resistance back into view.

The pair is now pressing up against a well-defined ceiling near 1.8715, with a sustained break above this area likely to confirm renewed upside momentum.

From a technical perspective, the broader trend remains constructive while GBP/CAD holds above its 200-day exponential moving average at 1.8326, a level that continues to underpin the medium-term bullish structure.

If resistance gives way, the next major upside target sits in the 1.8840–1.8900 region, an area that corresponds with prior highs and a key supply zone from 2025.

Momentum indicators support the near-term advance. The Relative Strength Index is rising and currently sits at 62.53, a level consistent with strengthening upside momentum but not yet stretched.

However, failure to clear resistance could expose the pair to a corrective pullback, with the 200-day EMA likely to act as the first meaningful downside objective.

Beyond technicals, price action in GBP/CAD is being driven primarily by developments in the US dollar. The latest push higher closely mirrors gains in GBP/USD, underscoring the pair’s sensitivity to broader dollar dynamics.

The dollar has come under pressure amid speculation surrounding potential intervention by the Bank of Japan to stabilise the yen, a process that involves selling dollars and buying yen.

As GBP/USD strengthens in response, GBP/CAD has followed higher, reinforcing the link between the two pairs. As a result, near-term direction for GBP/CAD is likely to depend heavily on how sterling performs against the dollar.

There are, however, emerging signs that GBP/USD may be approaching a consolidation phase. The pair has moved into overbought territory, increasing the risk of a corrective move lower.

The midweek policy decision from the Federal Reserve represents a key event risk, particularly if guidance proves less dovish than markets currently expect.

Any pullback in GBP/USD triggered by a firmer Fed tone would likely be echoed in GBP/CAD, limiting near-term upside and potentially forcing a retest of trend support.

Looking beyond this week, downside risks appear contained. Even if GBP/USD corrects, the broader uptrend remains intact, suggesting any weakness should be shallow rather than trend-changing.

That underlying resilience keeps modest tailwinds behind GBP/CAD and leaves the pair on course for a renewed test of the 2025 highs near 1.89 later in the first quarter, provided broader risk sentiment remains supportive.