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GBP/CAD reaches decade high as USMCA uncertainty weighs on CAD
The rise followed the Trump administration declining to extend the USMCA at the mandatory July 1 review, adding longer-term trade uncertainty.
GBP/CAD climbed to its highest level in about a decade as market conditions shifted in favor of Sterling and against the Canadian Dollar, according to Action Forex. The Pound benefited from easing domestic political risks and from the Bank of England effectively ruling out near term rate cuts, leaving a persistent yield advantage versus Canada.
The article points to a newer driver, rising uncertainty around Canada’s trade outlook after the Trump administration declined to extend the USMCA at the mandatory trilateral review on July 1. While the agreement remains in force under an annual review mechanism for up to another decade, the decision increases the likelihood of recurring negotiations and periodic policy uncertainty for businesses.
Action Forex also links the trade uncertainty to expectations for the Bank of Canada to maintain a cautious stance, noting that the central bank has downplayed the inflation impact of higher energy prices and cited limited evidence of broader price pressure. That backdrop has been reflected in positioning, with speculative bearish bets against the Canadian Dollar rising to their highest level since December.
Looking ahead, the focus is on Canada’s June employment data due tomorrow, which could influence expectations before the Bank of Canada’s July 15 meeting. Consensus expects employment to rise by around 10,000 after May’s 88,000 gain, with the unemployment rate steady at 6.6%.