There's potentially beneficial news for you today, if you're a Canadian thinking of emigrating to the UK, or a Canadian business owner making international payments to the UK, for your imports and exports.
To be specific, the Canadian dollar to pound interbank exchange rate has hit its highest in over 3 months, or since February 15th, at 0.5860.
By comparison, back on March 16th, the CAD was as weak as 0.5635 versus the GBP. So the exchange rate has since strengthened by +1.25 cents, or +3.99%.
To contextualise this rise in the Canadian dollar versus the pound for you, at today's interbank exchange rate of 0.5860, CA$250,000 would be worth £146,500.
Meanwhile, back on March 16th at the interbank exchange rate of 0.5635, CA$250,000 would have been worth just £140,875.
So for the same Canadian dollar amount, that's an increase of +£5,625.
This might benefit you, because when you transfer money to the UK from Canada, you could now get a notably higher pound total, compared to if you'd transferred money in the recent past.
In turn, this could give you a helping hand when you emigrate to the UK, to buy a property and settle in, or to make trading with the UK less costly for your business.
A first factor why the Canadian dollar to pound rate has touched this 3-month high is because the USA has announced that it will remove its metal tariffs on Canada.
Also, a further reason why the CAD has risen versus the GBP is because the Bank of Canada has said that it's "natural" for Canada's interest rates to rise. Lastly, the Canadian dollar has risen, as oil prices have climbed.
Let's take a more thorough look at these reasons why the Canadian dollar has strengthened against sterling. You might find this useful, to help you decide when to exchange currencies.
CAD to GBP Rises, as US to Remove Metal Tariffs on Canada
A first partial explanation why the Canadian dollar to pound interbank exchange rate has reached this 3-month high is because the USA has announced that it will remove its metal tariffs on Canada.
To be specific, last Friday 17th May, the United States said that it would take off its 10% and 25% tariffs on imports of Canada's steel and aluminium, reports newspaper The Globe And Mail.
This has contributed to strengthen the Canadian dollar, because as a result of the USA's decision, Canadian steel and aluminium will now be cheaper in America. This might encourage more US companies to buy Canada's metals, for use in construction and other projects.
In turn, this could help accelerate Canada's economic growth, protect jobs, and further trade ties.
The USA's decision to end its tariffs on Canada's metals has also helped lift the value of the CAD versus the GBP, because the tariffs were one of the remaining hurdles to signing the United States Mexico Canada Agreement (USMCA) of free trade.
Now that the tariffs have been removed, the USMCA might be signed in the coming weeks, which could also strengthen Canada's economy.
Canada's Prime Minister Justin Trudeau said following the USA's announcement last Friday that: "Now that we've had a full lift on these tariffs we are going to work with the United States on timing for ratification" of the USMCA.
Mr. Trudeau added that he's "optimistic" that USMCA will go into effect soon. So this has helped lift the value of the Canadian dollar against sterling.
Canadian Dollar to Pound Rises, as Higher CA Interest Rates "Natural"
In addition, another factor why the Canadian dollar to pound interbank exchange rate has hit this 3-month high is because, last Friday 17th May, Bank of Canada (BoC) Governor told Bloomberg TV that higher interest rates in Canada are "natural".
In particular, Mr. Poloz said that: "The natural tendency is for interest rates to still go up a bit", about the current 1.75%.
The BoC Governor's remarks have lifted the value of the CAD, because when Canada's interest rate rises, this often points to accelerating economic momentum in Canada.
In fact, Mr. Poloz commented last Friday that Canada's recent GDP growth slowdown was just a "detour" and that recent strong job creation statistics were "adding up to a pretty good picture".
Canada's economy has created 426,400 new jobs in the last 12 months, the most in 12 years. This is even though Canada's economy has faced headwinds, such as the USA and China's trade tensions, Canada's escalated household debt, and a slowdown in the housing market.
So Canada's strong employment market has contributed to reinforce the value of the CAD versus GBP.
Also, the Governor of Canada's central bank told Bloomberg last Friday that, if the USA and China resolve their trade war, this might further improve Canada's economic outlook.
If "sentiment goes up, investment will recover and we’re back into the positive scenario," remarked Mr. Poloz. This might positively influence the outlook for the Canadian dollar versus sterling in coming weeks.
The Canadian dollar versus sterling has also jumped following Mr. Poloz's comments, because when Canada's interest rates rise, this makes investing in Canadian assets more profitable.
In turn, global money managers feel more inclined to buy the Canadian dollar, to buy these profitable assets, lifting demand for the CAD. So this increases the value of Canada's currency.
Canadian Dollar Versus Sterling Gains, as Oil Price Rises
Also, an additional reason why the Canadian dollar to pound interbank exchange rate has risen in value is because crude oil, Canada's biggest export, continues to rise in price.
At the time of writing, a barrel of Brent crude costs US$72.03, having risen by +30% this year so far, according to CNBC. In turn, Canada's oil producers make more money from exporting the black gold.
The oil price has risen, first because of increasing tensions in the Middle East. In particular, this Monday 20th May, US President Donald Trump threatened Iran with "great force", if Iran threatens the USA's interests in the region.
It's thought that Iran is responsible for a recent rocket attack in Iraq. In turn, this has benefited the Canadian dollar versus the pound.
Second, the price of Brent crude has increased, because its thought that oil cartel OPEC+ will soon announce that it plans to continue to restrict the oil supply.
Since the start of the year, OPEC+ has limited how much oil it makes available, to drive up the price, and make America's shale producers unprofitable. However, this benefits Canada's economy, and the CAD too.
So to conclude, the Canadian dollar has benefited from the USA's removing its metal tariffs on Canada, the "natural tendency" for Canada's interest rates to rise, and higher oil prices.
These factors have contributed to lift the Canadian dollar to pound interbank exchange rate to a 3-month high, of 0.5860. This could benefit you, to transfer money to the UK from Canada.
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Please bear in mind, this article is Pure FX’s opinion only and does not constitute advice. Moreover, the exchange rates referred to in this article are the interbank rates, which are the rates at which banks and financial institutions buy and sell currency to each other. Therefore these exchange rates cannot be accessed by individuals or SMEs, and are not the same rates that Pure FX can offer. To get a free exchange rate quote, call us on +44 (0) 1494 671800, or email firstname.lastname@example.org.