© kasto, Adobe Stock

1 Pound buys 1.7935 Canadian Dollars on the open market at the time of writing which represents an improvement on 1.7867, where the exchange rate started the week.

The GBP/CAD has been looking soft for much of late-March / April but it appears that the Canadian Dollar's return to form might be offering the Pound the opportunity to form a base.

Analyst Joe Manimbo with Western Union tells us that one concern for the Canadian Dollar at present is the rallying US Dollar which is in turn pressuring the price of commodities, which in turn has a knock-on effect on the currencies of countries which earn a great deal of their foreign currency through the export of commodities.

"The loonie awoke to fresh three-week lows as the greenback resumed a yield-induced rally to fresh highs. The stronger U.S. Dollar put pressure on commodities, pulling oil further below $68, which compounded the Canadian currency’s decline," says Manimbo.

It would appear that the Canadian Dollar's headache from a rising U.S. Dollar is allowing Sterling to take advantage and recapture some lost ground.

Technical strategist Sean Osborne, with Scotiabank in Toronto says the "GBP is moving away from key support at 1.7850, but gains are limited and, based on weak trend momentum on the shorter-term studies, prone to a choppy setbacks."

The longer-term outlook for GBP/CAD is however largely unchanged suggests Osborne who remains "cautiously bullish while the 1.7850 area holds."

The Scotiabank technical analyst is eyeing a longer-run appreciation towards 1.99.

Above: The GBP/CAD remains in a long-term uptrend, which should ultimately prevail.

Advertisement

Get up to 5% more foreign exchange by using a specialist provider to get closer to the real market rate and avoid the gaping spreads charged by your bank when providing currency. Learn more here.