GBP CAD: British Pound-Canadian Dollar Rate, Chart, Forecast
Cross-currency pairs such as the GBP CAD may not be the most popular currency pairs in Forex. However, the GBP/CAD and other comparable currency pairs have tremendous advantages, especially for short-term trading. This article will detail these advantages and teach you everything you need to know about trading the GBP to CAD. In particular, we will analyse the historical development of the GBPCAD exchange rate.
We will also perform a technical analysis of the current GBPCAD chart context to determine the current trend. We will also provide you with essential tips that will help novice GBP CAD traders avoid costly mistakes. Finally, we will introduce an online broker that we have identified as one of the best for trading GBP/CAD.
What is GBP CAD? Overview
Since it does not contain the dollar, the GBP CAD is not one of the major fathers of Forex. The GBP CAD pair is in fact, one of the so-called cross currency pairs. The GBPCAD rate expresses the value of 1 GBP in CAD. It is used to perform the GBP CAD conversion. In other words, it measures the relative strength of the British pound and the Canadian dollar.
This means that GBP CAD traders need to be interested in the British and Canadian economic outlook to make GBPCAD forecasts. Note that the GBP CAD, like other cross currency pairs, has higher volatility most of the time than the major currency pairs. This is an undeniable advantage for those interested in Forex to make quick gains. However, you should never forget that volatility can also work against you.
We would also like to take this opportunity to point out that GBPCAD trading and Forex, in general, are markets more suited for short-term trading than long-term investment.
GBP CAD Chart
Below you will be able to see a real-time chart of the GBP CAD exchange rate.
How to Read the GBP CAD Chart
One of the unique features of Forex is that the currency of quotation varies from one pair to another, whereas with stocks, for example, all stocks in the same market are priced in the same currency. The first currency of the pair, in this case, GBP, is called the base currency. The second currency, which in this case is CAD, is called the quote currency.
With the GBP CAD pair, we are therefore interested in the price of the British pound denominated in Canadian dollars. More precisely, the GBP CAD exchange rate indicates the amount of Canadian dollars needed to buy one British pound. It is used to convert GBP to CAD. If 1 GBP to CAD equals 1.60, it means that you need 1.60 CAD to buy 1 GBP.
If you need to convert CAD to GBP, you will need to look at the CAD GBP pair, which is not a tradable currency pair at most brokers.
Finally, when it comes to displaying GBP CAD charts, the same options are available as on all markets. So there are GBP CAD charts in Japanese candlestick or online. You can also choose from short-term GBP CAD charts, which show the evolution of the GBPCAD exchange rate over the last few hours, or long-term GBPCAD charts, which show the pair's evolution over the previous few years or even decades.
GBP CAD Historical Data
This section will be dedicated in a first part to the study of the evolution of the GBP CAD exchange rate during its history, while a second part will be devoted to the analysis of the current technical context of the GBPCAD pair.
GBP CAD Exchange Rate History
Let's take a look at the major phases of the GBPCAD exchange rate's evolution since the year 2000. We will base our observations on a monthly GBP CAD chart.
After an all-time high of 2.5451 in December 2002, the GBP CAD exchange rate showed a powerful downward trend until it reached an all-time low of 1.4830 in May 2010. From May 2010 until August 2013, the GBPCAD moved sideways in a narrow range around the 1.60 level.
From summer 2013 until summer 2015, we saw a meteoric rise in the GBPCAD, resulting in a high of 2.0972. However, this uptrend was reversed as quickly as it was recorded, as the GBP CAD was back to a low of 1.5735 as early as January 2017.
Since then, the GBP/CAD has been showing a long-term consolidation around a pivot point located around the significant psychological threshold of 1.7000.
GBP CAD Exchange Rate Today
Looking at the shorter-term chart of the GBPCAD confirms what the long-term chart already suggested, that the current trend of the GBP CAD is neutral.
Indeed, the weekly chart of the GBP CAD exchange rate that we have studied does not reveal any clear trend over the last few years. In particular, the GBPCAD pair has evolved since the end of 2019 in a sideways channel whose upper bound is located around 1.7800 and the lower bound around 1.6500.
However, it is essential to note that this lack of a long-term trend in the GBP CAD is by no means a drawback. Indeed, traders are primarily interested in the GBPCAD for short-term trading. It is simply the trend of the day, or even the trend of the next few hours, that interests GBP/CAD traders, for whom the underlying trend is of secondary importance.
In addition, it is essential to note that GBP CAD traders invariably invest up or down in the currency pair. In fact, it is just as easy to make a bullish bet as a bearish bet on Forex. Therefore, the direction of the trend is irrelevant to GBPCAD traders, who can make money whether the trend is positive or negative.
What Influences GBP CAD Exchange Rate?
Below we will look at the main economic mechanisms that influence the GBPCAD exchange rate. You will be able to make your own GBP CAD forecast based on fundamental analysis.
Central Bank Policy
Since central banks are responsible for monetary stability and managing the money supply, it is evident that central bank decisions are the most critical factors in the evolution of currency pairs, and the GBPCAD is no exception. In particular, we will be looking at the BoE's monetary policy and the BoC's monetary policy in this case. The more rigid the monetary policy in a country, the more it should push up the price of its currency.
Conversely, dovish monetary policies are bearish for the exchange rate of the currencies concerned. Since the GBP CAD pair involves, like all currency pairs, 2 currencies, we will therefore be interested in comparing the monetary policy of the BoE and the BoC to see which of the two has the more hawkish or dovish position.
British and Canadian Economic Calendar
Each week, many British and Canadian statistics are published in the economic calendar. When an economic statistic deviates from the consensus forecast, it impacts the corresponding currency's exchange rate. For example, a positive surprise on a British statistic will tend to favour the GBP and, therefore, the GBP/CAD. Conversely, good surprises in Canadian economic indicators will have a bearish impact on the GBP CAD.
Since Canada is an oil-producing country, there has historically been a positive correlation between the CAD and oil price. In practical terms, a rise in oil will be a bullish factor for the CAD and, therefore, bearish for the GBPCAD. Conversely, a decline in oil will penalize the CAD and therefore have a bullish impact on the GBP to CAD. It is therefore essential to follow the oil price closely when trading the GBP CAD exchange rate.
GBP CAD Forecast and Predictions
However, it is essential to remember that the GBPCAD should mainly be reserved for short-term trading, as we have already pointed out above. Indeed, the factors that influence the exchange rate of currency pairs are so diverse and unpredictable that medium-term GBP to CAD forecast are unreliable.
You can see this from the wide range of forecasts we have collected in writing this analysis.
GBP CAD Forecast 2022
Why Trade GBP CAD Today?
Below we will discuss the advantages of the GBPCAD pair that traders most often cite.
Volatility: The volatility of cross currency pairs like the GBPCAD is often higher than that of the most popular forex pairs. The level of gains one can expect (and the level of losses one can fear) depends mainly on the currency pair's volatility. In other words, the GBP CAD pair has a more significant potential for gains than many other currency pairs.
Leverage: In addition to high volatility, GBPCAD traders will benefit from high leverage, multiplying performance. This is because leverage allows for significant gains to be made with minimal changes in the GBPCAD exchange rate. As with volatility, however, it is essential to remember that leverage increases gains and losses.
Proxy for Oil Investing: Since the CAD is a currency highly correlated to oil price, the GBPCAD can be considered a proxy to bet on the oil price. Traders who have a bullish view of oil will be able to sell GBPCAD. Conversely, if you expect oil to fall, the right choice is to buy GBP CAD.
Trading diversification: Most traders are used to trading currency pairs tied to the Euro or the Dollar, the two dominant currencies in the world. Thus, the GBPCAD pair, which contains neither of these two dominant currencies, can be considered an ideal currency pair to diversify away from the major currency pairs.
Where Can I Invest in the GBP CAD Pair?
You can easily trade GBPCAD via the broker ZFX. This is a regulated broker with many benefits to offer beginners and advanced traders alike.
ZFX provides its clients with the MT4 trading platform, which is the most widely used globally thanks to its many technical analysis and automated trading advantages. Also, as you can see by yourself with a demo account, the spread for GBPCAD is usually lower than 1 pip. Finally, it is worth noting that ZFX offers its clients to trade stocks, indices, forex and commodities.
How to Trade GBP CAD Now
Trading GBPCAD through the broker ZFX is very simple and fast. Indeed, the account opening is done entirely online, and takes only a few minutes. Let's go through each step in detail.
1 - Register with ZFX
First, go to the ZFX broker's website, and click on the "open an account" button. You will then have to fill in a registration form with several personal details, including your phone number, which will be verified by SMS.
After filling out the form, click on the "next" button at the bottom of the page. Immediately after this step, ZFX will display your MT4 login and password, and invite you to download the platform.
2 - Make your first deposit
To do this, you will need to click on the "make a deposit" button on the screen that is displayed immediately after registration. You will then be asked to choose a payment method. Let's take Mastercard as an example:
On this screen you will be asked to indicate the deposit amount and then click on the "Confirm Deposit" button. You will then be asked for your credit card information before the final validation of the payment.
3 - Account verification
Finally, proceed with the account verification by sending supporting documents.
As shown in the image above, you will need to upload the documents directly to the ZFX website.
4 – Trade GBPCAD
Once your documents are validated, you will then be ready to trade GBPCAD.
Tips for GBP CAD Beginner Traders
To help you get started in the best possible way, we have put together below the tips that we feel are the most important for getting started in GBPCAD trading.
Learn Technical Analysis
Those interested in long-term GBPCAD investing should be interested in economic factors as well as monetary policy. However, if you are planning to trade the GBPCAD in the short term, as is recommended, you will primarily use technical analysis to make your trading decisions. Through a visual analysis accessible to all, technical analysis will allow you to study trends, define entry and exit points, and find GBP CAD trading signals. Note that it is quick and easy to learn technical analysis thanks to the many free resources available on the internet.
Keep a trading journal
If you want to constantly improve your GBP/CAD trading results, it will be essential to record all your trades in a trading journal. You will need to register all the details of your GBP CAD trades, including the reasons for entering and exiting positions. This will allow you to periodically analyze your GBPCAD trading log to identify patterns that usually result in gains and should be multiplied. You will also be able to spot recurring mistakes that you should try to avoid.
Choose a reputable broker
Obviously, if you want to succeed in GBPCAD trading, you need to have peace of mind about your broker. This should be a regulated broker, with an efficient trading platform that offers all the features you need. The best way to do this is to test the trading platform with a demo account, also allowing you to practice trading GBP CAD without risking losing money.
Find a good source of GBP CAD information
Finally, it is also crucial to find a good source of GBP/CAD news. One way to do this is to look at the real-time economic calendar, which shows the various statistics likely to influence the markets each day. Information about British and Canadian politics can also affect the price of their currency and, therefore, the GBPCAD exchange rate.
Bottom Line: Is GBPCAD a Good Investment Now?
While not the most popular choice among novice traders, the GBP CAD pair has several key advantages that make it well worth considering. In particular, it is one of the few pairs that does not contain either the Euro or the Dollar, the two forex currency princes.
Furthermore, we have seen that the GBPCAD is a short-term trading instrument that allows for significant gains. If you too would like to start profiting from the potential of the GBPCAD, you can start trading the pair through ZFX in just a few easy steps.