GBP/CAD Holds Steady Amid Mixed Canadian Employment Data

GBP/CAD is trading close to one-month highs as investors react to mixed employment data from Canada. Higher unemployment rates and weaker wage growth have capped gains for the Canadian dollar. Attention now turns to the upcoming UK employment and GDP reports scheduled for next week.

The Canadian Dollar (CAD) remained largely unchanged against the British Pound (GBP) on Friday, with GBP/CAD showing little directional movement as the market reacted modestly to Canada’s latest employment data. At the time of writing, the pair is trading around 1.8636, close to a one-month high.

Statistics Canada reported that employment increased by 8,200 jobs in December, surpassing expectations of a 5,000 job decline but significantly lower than November’s 53,600 gain. Meanwhile, the unemployment rate rose to 6.8% from 6.5%, higher than the anticipated 6.6%.

Wage growth showed signs of slowing, with average hourly wages rising 3.7% year-over-year in December, down from 4.0% previously.

From a monetary policy standpoint, the mixed employment report is unlikely to significantly change short-term expectations for the Bank of Canada (BoC). The market largely anticipates that the central bank will keep interest rates steady throughout most of 2026.

While some analysts had speculated about a possible rate hike later in the year, the recent labor data—characterized by rising unemployment and slower wage growth—weighs against that possibility and supports a cautious, wait-and-see approach.

At its December meeting, the BoC held its policy rate at 2.25%, describing it as “about the right level.” Market participants are now focused on upcoming Canadian inflation figures expected later this month, which could influence near-term monetary policy forecasts.

In the UK, attention is shifting to key economic releases next week, including labor market data on Tuesday and the November GDP report on Thursday.

On a broader scale, the interest rate gap between the BoC and the Bank of England (BoE) continues to favor the British Pound, maintaining upward momentum for GBP/CAD.

Additionally, the Canadian Dollar remains sensitive to developments in the oil market. Increased U.S. regulation of Venezuelan oil supplies has raised expectations of greater global output, heightening concerns over oversupply that could pressure oil prices and weigh on the Loonie, given Canada’s role as a major energy exporter.

Sources: Fxstreet