**Pound to Canadian Dollar Exchange Rate Forecast: Oil Prices and UK Fiscal Policy Shape GBP/CAD Outlook**
*Source: Lauren Johnson, ExchangeRates.org.uk, November 25, 2025*
The Pound to Canadian Dollar (GBP/CAD) exchange rate has seen notable volatility, influenced by a confluence of domestic and global economic factors. Recently, the rate has pushed higher amid market reactions to weakening oil prices and the announcement of the UK Autumn Budget. These developments have shifted investor sentiment, affecting both currencies and prompting fresh forecasts from analysts and traders.
As of the latest updates, the GBP/CAD pair is hovering around 1.6980 in live interbank rates, with indications that the trajectory may continue upward if current conditions persist. Factors like energy market dynamics, central bank policies, and fiscal strategies will continue playing a key role into 2026.
Let’s delve deeper into the elements currently driving the Pound to Canadian Dollar exchange rate and what the future may hold for this major currency pairing.
—
**Oil Markets Take Center Stage in CAD Movement**
Canada’s economy is heavily linked to commodity exports, particularly crude oil. As such, the Canadian Dollar (CAD) often exhibits a high correlation with fluctuations in oil prices.
Recently, global oil benchmarks have come under pressure, leading to a weaker CAD. Several contributing factors have played into the oil price slump:
– **Global Supply and Demand Imbalance:**
– Despite supply cuts from OPEC+ (Organization of the Petroleum Exporting Countries plus allies), global demand for crude has shown signs of plateauing.
– China’s economic recovery, anticipated to boost demand considerably, has been underwhelming amid domestic financial troubles and reduced industrial activity.
– Increased production from non-OPEC countries, including the United States and Brazil, has offset attempts to curb global crude supply.
– **U.S. Strategic Reserve Releases and Inventory Builds:**
– The U.S. has intermittently released oil from its Strategic Petroleum Reserve (SPR) to tame inflationary energy costs, increasing spot supply.
– Weekly data from the Energy Information Administration (EIA) has also shown higher-than-expected inventory builds, signaling weaker domestic demand than anticipated.
– **Geopolitical Risk Not Translating to Long-Term Premium:**
– While geopolitical tensions in the Middle East—including Israel-Gaza conflicts—initially sparked a risk premium in oil prices, markets have largely moved past those fears, reassessing actual supply disruption risks as minimal.
This downward trend in oil prices has directly translated into diminished demand for the CAD. Since the oil implosion began, CAD has faced strong headwinds in currency markets.
—
**UK Autumn Budget and Economic Recalibration**
The UK Autumn Budget, delivered by Chancellor Jeremy Hunt, introduced a mix of tax reforms and fiscal measures designed to stimulate the economy, support consumers, and build economic resilience.
Key features of the budget include:
– **Reduction in National Insurance Contributions:**
– A major headline policy was the planned reduction in National Insurance contributions, designed to put more money into workers’ pockets and stimulate disposable income.
– **Tax Reliefs for Businesses:**
– Hunt extended tax incentives for business investments, including plans to make “full expensing”—in which businesses can deduct 100% of capital spending—permanent.
– These incentives aim to boost productivity and long-term investment in the UK, a strategy supported by the Office for Budget Responsibility (OBR) projections.
– **Welfare Adjustments and Targeted Spending:**
– The budget included slight increases in welfare expenditures while targeting efficiency gains in public services to offset the spending.
– Critics argue these additions may not be adequate in cushioning households from inflationary pressures, especially with energy costs still elevated in the short term.
Market reaction to the UK budget was moderately positive. Investors interpreted it as a balanced attempt to support growth without jeopardizing fiscal stability. The British Pound has responded with relative strength in major crossings, including versus the
Read more on USD/CAD trading.