Sterling remains weak in comparison to commodity-linked CAD

GBP/CAD soaring towards 1.6950 – Scotiabank

Sterling's attempt to recover from the multi-year lows of 1.6540 earlier today was stopped at 110 pips at 1.6650 before returning to the 1.6620 region.

Higher oil prices support the CAD

The British pound has not seen a significant recovery due to the Canadian dollar remaining strong and oil prices rising from their weekly lows.

The failure to make progress in talks between Russia, Ukraine, and the warning by the International Energy Agency (IEA), that lower prices won't offset the reduction in global demand for Russian supplies has raised concerns about a shortage of crude oil. This has boosted commodity-linked CAD against its majors.

The Bank of England's Thursday dovish statement on Thursday weighed down the weakness in the pound. Although the bank raised interest rates as expected, the tone of its monetary statement was considered to be dovish, which led to broad-based GBP weakness.

GBP/CAD to appreciate towards 1.6950 – Scotiabank

FX analysts at Scotiabank expect the pair to rally towards 1.6950 in the next months. "We still believe that GBP/CAD is relatively 'cheap" here, near the bottom of the sideways range which has persisted from 2020. We look for GBP gains to trigger additional strength to the low 1.70s.