GBP/CAD: Pound sterling / Canadian dollar

GBP/CAD is the price of one British pound in Canadian dollars. If the pair is quoted at 1.8000, one pound costs 1.80 Canadian dollars. It pairs a services-heavy economy that imports much of its energy with a commodity-rich one whose largest customer, by far, is the United States. The pair responds to UK politics and data, to Canadian data and trade news, to the two central banks and, at times, to the price of oil.

This profile covers who trades the pair, the two central banks behind it, what tends to move it, how it behaves through the day, what it costs, a worked pip value example, its correlations, notable history and how to approach it as a beginner.

What GBP/CAD is and who trades it

GBP/CAD is a cross: it does not include the US dollar. Sterling is the base currency and the Canadian dollar (nicknamed the "loonie" after the bird on its one-dollar coin) is the quote currency. When the pair rises, the pound is strengthening against the Canadian dollar; when it falls, the Canadian dollar is strengthening. The price is closely tied to two majors: GBP/CAD is approximately GBP/USD multiplied by USD/CAD. Our guide to currency pairs explains how crosses are derived.

The UK and Canada share a head of state, long historical ties and substantial trade and investment links, and people move between the two to live and work. Commercial flows include UK and Canadian companies trading goods and services, pension funds and asset managers holding each other's bonds and shares, and mining and energy companies, many of which raise money in London and Toronto. Macro funds trade the pair to express views on the relative paths of the two central banks or on oil, and short-term traders are drawn by its liquidity during the London and New York hours.

Under ESMA's rules, GBP/CAD counts as a major because both currencies are on the list of USD, EUR, JPY, GBP, CAD and CHF. EU retail clients can therefore use up to 30:1 leverage on it, even though traders and brokers normally call it a cross. Our guide to ESMA leverage limits explains how the caps work.

The two economies and central banks behind it

The UK and the Bank of England

Sterling is managed by the Bank of England, whose nine-member Monetary Policy Committee makes eight scheduled decisions a year, announced at 12:00 UK time along with the minutes and the vote split. Its remit is a 2% inflation target set by the government, and four times a year it publishes the Monetary Policy Report with updated forecasts. The UK economy is dominated by services, including a large financial sector, and the UK is a net importer of energy.

Canada and the Bank of Canada

The Bank of Canada targets 2% inflation, the midpoint of a 1 to 3% range. It announces policy decisions on eight fixed dates a year at 09:45 Eastern Time, which is 14:45 UK time for most of the year. Four of those decisions come with the quarterly Monetary Policy Report. Canada is a large, open economy with significant natural resources: crude oil, natural gas, metals, timber and agricultural goods. The United States buys the large majority of its goods exports, including most of its crude oil.

The two economies are exposed to very different shocks. Sterling has been most sensitive to UK inflation, Bank of England expectations and domestic politics; the Canadian dollar to oil, the health of the US economy and trade policy. Our guide to central banks and interest rates explains why the expected path of rates usually matters more than any single decision.

What typically moves GBP/CAD

Rate expectations

The gap between expected UK and Canadian interest rates is the most persistent driver. When markets expect the Bank of England to keep rates higher for longer than the Bank of Canada, sterling tends to benefit (a higher GBP/CAD); when the Bank of Canada looks the more hawkish, the Canadian dollar tends to gain. The interest rate differential also sets the overnight swap.

Oil

Canada's large crude exports mean that oil prices have often been reflected in the Canadian dollar: higher oil has tended to support the loonie, and therefore to push GBP/CAD lower, while falling oil has tended to do the reverse. The UK's position as an energy importer can reinforce that effect, since higher energy prices weigh on UK household incomes. But the relationship is far from constant. Pipeline constraints, the discount on Canadian heavy crude, US oil production and the dominance of interest rates at times have all weakened it. Our guide to oil trading explains what moves crude itself.

UK data, politics and fiscal news

UK data from the Office for National Statistics is usually released at 07:00 UK time, so CPI, labour market and GDP numbers can move the pair at the London open. Sterling has historically been more politically sensitive than many major currencies: the 2016 EU referendum, general elections and budgets have all produced sharp moves. See how economic data moves forex.

Canadian data and US trade

Statistics Canada usually publishes major data at 08:30 Eastern Time, which is 13:30 UK time for most of the year. The monthly Labour Force Survey is often released on the same morning as the US jobs report, which can make the early afternoon in the UK particularly lively for this pair. Because the US is Canada's dominant trading partner, news about US tariffs and trade agreements has also moved the Canadian dollar.

The dollar, indirectly

A US data surprise that moves GBP/USD and USD/CAD by different amounts changes GBP/CAD. The Canadian dollar has often moved less against the US dollar than sterling has on US news, so broad dollar swings can leave a mark on the cross even when nothing has happened in the UK or Canada.

Its character: liquidity, sessions and volatility

GBP/CAD is liquid during European and North American hours, though much less traded than GBP/USD or USD/CAD, and its pricing leans on those two pairs. Times below are UK time.

• Asian session (roughly 23:00 to 07:00 UK time): usually quiet, with wider spreads. Neither currency has much local news in these hours.
• London morning (about 07:00 to 12:00 UK time): active, with UK data at 07:00 and Bank of England decisions at 12:00 on MPC days.
• London and New York overlap (about 13:00 to 17:00 UK time): often the busiest period, with Canadian and US data at 13:30 and Bank of Canada decisions at 14:45.
• Late New York (after about 17:00 UK time): activity drops away towards the daily rollover.

These UK times hold for most of the year, but the UK and North America change their clocks on different dates, so for a few weeks in March and in late October and early November the North American releases arrive an hour earlier in UK time. The market hours tool shows sessions in your own time zone, and the guide to forex market hours and sessions explains the overlaps.

GBP/CAD has generally moved more in pips each day than USD/CAD or EUR/GBP, partly because its price is higher and partly because sterling's moves and oil-driven Canadian dollar moves can add up rather than cancel out. When UK news and an oil shock coincide, the pair can move a long way quickly.

Costs of trading GBP/CAD

Spreads are typically wider than on GBP/USD or USD/CAD at the same broker, reflecting lower trading volume. They are usually tightest during the London and New York overlap and widen in the Asian session, around the daily rollover, at the Sunday evening open and around central bank decisions and major data. Compare typical spreads at the hours you actually trade rather than advertised minimums; see spreads and commissions and why spreads widen.

The overnight swap reflects the difference between UK and Canadian interest rates plus the broker's markup. Whichever currency has the higher rate, being long that currency has tended to be the side that earns a small credit or pays less, and the pattern flips when the differential flips. Check the swap in your platform before planning a multi-week hold; the swap calculator estimates the cost over several nights, and swap and overnight financing explains the mechanics.

Pip value: a worked example

On GBP/CAD a pip is 0.0001 and profit and loss accrue in Canadian dollars, the quote currency. These numbers are illustrative.

• One standard lot is 100,000 pounds. A pip is 100,000 times 0.0001 = 10 CAD.
• A mini lot (10,000 pounds) is 1 CAD per pip; a micro lot (1,000 pounds) is 0.10 CAD per pip.

Your platform converts that into your account currency. On a dollar account with USD/CAD at an illustrative 1.3700, 10 CAD is 10 divided by 1.37, about 7.30 USD. On a euro account with EUR/CAD at 1.5000, it is about 6.67 EUR. On a pound account with GBP/CAD at 1.8000, it is about 5.56 GBP.

Now a trade. You buy 0.25 lots (25,000 pounds) at 1.8000 with a stop at 1.7930, 70 pips away. Each pip is worth 2.50 CAD, so the stop is 175 CAD, about 97 GBP at 1.8000, or about 128 USD at a USD/CAD rate of 1.3700, before spread and swap. Margin at 30:1 on 25,000 pounds is about 833 GBP. Margin is collateral, not the maximum loss, and a gap can carry the price through your stop. The pip value calculator, margin calculator and position size calculator handle the conversions.

Correlations with other pairs

• GBP/USD has often moved in the same direction as GBP/CAD when sterling is the driver.
• USD/CAD has often moved in the same direction as GBP/CAD when the Canadian dollar is the driver, because a weaker loonie lifts both.
• GBP/AUD and GBP/NZD have often moved with GBP/CAD on days dominated by sterling or by commodity-currency weakness.
• Crude oil is not a currency, but over many periods it has shown an inverse relationship with GBP/CAD, through its effect on the Canadian dollar.

So long GBP/CAD and long GBP/USD can be largely one bet on sterling, and long GBP/CAD with long USD/CAD largely one bet against the Canadian dollar. Correlations change, sometimes quickly. Our guide to currency correlation shows how to measure them over a recent window.

Notable history

The 2014 to 2016 oil slump

The fall in crude prices from mid-2014 weighed heavily on the Canadian dollar and prompted Bank of Canada rate cuts in 2015. GBP/CAD rose substantially from mid-2014 into 2015, a clear example of the oil link working through the Canadian side of the pair.

The Brexit referendum (23 June 2016)

The UK voted to leave the EU in the referendum held on 23 June 2016. As results came in overnight and into 24 June, sterling fell steeply across the board, reaching its lowest level against the dollar since 1985, and GBP/CAD fell sharply too. Spreads widened during the night. It is a textbook example of gap risk around a scheduled event with a binary outcome.

The UK mini-budget (September 2022)

The government's fiscal statement on 23 September 2022 triggered a sell-off in gilts and sterling, and the pound hit a record low against the dollar on 26 September. The Bank of England stepped into the gilt market on 28 September. GBP/CAD dropped sharply as the pound weakened, then retraced as policy changed course. The episode showed that fiscal credibility can drive sterling crosses as much as interest rates.

Trading GBP/CAD as a beginner

• Size from the stop, not the leverage. The 30:1 cap is higher than on GBP/AUD, but that does not make the pair calmer. Decide the most you are willing to lose, set the stop where the idea is wrong, then work out the lot size; see position sizing.
• Know the calendar. UK data at 07:00, Bank of England decisions at 12:00, Canadian data at 13:30 and Bank of Canada decisions at 14:45 all fall in UK working hours. Use an economic calendar and decide in advance whether to hold through them.
• Do not treat oil as a trading signal. The oil link is real over some periods and absent in others.
• Watch for doubled exposure. If you also trade GBP/USD or USD/CAD, check what you are really long and short.
• Keep the odds in view. Most retail CFD accounts lose money and leverage magnifies losses as much as gains; see leverage and margin and why most retail CFD traders lose.

Frequently asked questions

Is GBP/CAD a major or a cross?

In everyday trading language it is a cross, because it does not include the US dollar. Under ESMA's leverage rules it counts as a major, because both sterling and the Canadian dollar are on the list of USD, EUR, JPY, GBP, CAD and CHF, so EU retail clients can use up to 30:1.

Does the price of oil move GBP/CAD?

Often, but not reliably. Higher oil has tended to support the Canadian dollar and push GBP/CAD lower, but over some periods interest rates, UK news and risk sentiment have mattered far more.

When is GBP/CAD most active?

Usually during the London morning and the London and New York overlap, roughly 07:00 to 17:00 UK time, when UK, Canadian and US data and both central bank decisions are released. The Asian session is normally the quietest.

How much is a pip worth on GBP/CAD?

On a standard lot of 100,000 pounds, a pip is 10 Canadian dollars, which is usually roughly 5.5 to 7.5 units of pounds, euros or dollars depending on exchange rates at the time.