The GBP/CAD currency pair is staying steady as markets analyze Canada’s mixed job report. Currently, GBP/CAD is trading at around 1.8636, near its one-month high. Statistics Canada shared that employment rose by 8.2K in December, beating expectations of a 5K drop. However, this number is down from November’s 53.6K increase. The unemployment rate has also gone up to 6.8% from 6.5%, which is higher than the predicted 6.6%.

Wage Growth Trends

Wage growth appears to be slowing down. Average hourly wages increased by 3.7% year-on-year in December, down from 4.0%. The Bank of Canada is likely to keep interest rates steady through much of 2026, as this latest data complicates the likelihood of a rate hike. In the UK, attention is shifting to expected economic updates, including labor market data and the GDP report. The interest-rate gap between the Bank of Canada and the Bank of England continues to support the Pound. The Canadian Dollar is also affected by global oil supply worries. Tighter control over Venezuelan oil by Washington may influence oil prices, thereby impacting the Canadian Dollar because Canada is a major energy exporter. Looking back at January 2025, the market was examining a mixed Canadian jobs report and anticipated the Bank of Canada would keep rates steady. However, stubborn inflation led the BoC to raise rates twice in 2025, bringing the policy rate up to the current 3.0%. This shift from what was initially expected is important for upcoming positioning.

Pound vs. Canadian Dollar

The trend of a weakening labor market that began in early 2025 carried on throughout the year. Statistics Canada’s latest report shows the unemployment rate has climbed to 7.2%, creating a tough challenge for the central bank. This ongoing economic weakness restricts the BoC’s ability to raise rates, even though inflation remains slightly above its target. The interest rate gap that favored the Pound a year ago is still significant for GBP/CAD. With the Bank of England’s policy rate currently at 3.5%, the 50-basis-point difference over the BoC continues to support the Pound against the Canadian dollar. This situation indicates that holding long GBP/CAD positions may be a smart strategy. Concerns about oil oversupply from early 2025 have eased. Stronger-than-expected global demand has pushed WTI crude prices back up to around $85 a barrel, a level we haven’t seen since late 2024. This supports the Loonie and could limit significant upward movement in the GBP/CAD pair. Given these mixed signals, traders should consider strategies that prepare for potential volatility. Options contracts, like buying puts on GBP/CAD, can provide protection against a sudden surge in the Canadian dollar influenced by oil prices. Conversely, using call options can offer leveraged exposure if Canada’s economic weakness continues to pressure its currency. Create your live VT Markets account and start trading now.

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