Pound Slips Against Loonie as BoE Tone Dents Rate Hopes

What shifted last week was the relative pace of repricing. Before the BoE decision, markets had priced roughly two quarter-point cuts from the BoE over the next twelve months. After the statement, that estimate edged toward two and a half cuts. Canada's rate path barely budged. That subtle gap, traders said, was enough to push GBP/CAD through its 50-day moving average, a level that had held since early March.

Support now sits around CA$1.8600, a zone that saw buying interest in February. A break below that would open the October 2024 low near CA$1.8350. On the upside, resistance has formed at CA$1.8780, where sellers stepped in on Monday and again on Wednesday. The pair remains within the broader range that has contained it for most of 2025.

The next scheduled catalyst for sterling is the UK CPI print due Wednesday. A reading below the Bank's February forecast would reinforce the case for an earlier rate cut and likely send GBP/CAD toward the lower end of its band. A hotter number would push the pair back toward CA$1.8780, traders said. For the loonie, Friday's Canadian retail sales data will offer the next read on domestic demand. Neither release is expected to break the pair out of its range on its own.

Traders tracking broader currency dynamics can find parallels in the EUR/USD profile and the pound's relationship with the dollar. The same repricing of UK rate expectations that weighed on cable also hit the pound against the Canadian dollar. The CAD leg added its own layer – oil supply uncertainty and a steady Bank of Canada kept the loonie from weakening and amplifying sterling's drop.

The immediate path for GBP/CAD hinges on whether UK political noise fades or escalates before the May BoE meeting. If Starmer's succession is resolved quickly, the pound could recoup some of last week's loss. If the leadership vacuum drags, traders expect sterling to stay under pressure, with the 1.8600 level as the next line of defense.