5-Bank Canadian Dollar Forecast - December 2025
Stay informed with the latest CAD forecasts and exchange rate insights from Canada’s top financial institutions. This page brings you updated USD to CAD forecast, EUR to CAD forecast and GBP to CAD forecast every month. Whether you're managing international business payments, converting funds for global investments, or simply tracking currency movements, these FX forecasts provide valuable guidance.
The Canadian dollar forecast from multiple banks helps you assess the Canadian dollar trend. Will the Canadian dollar go up or struggle to find demand? All your questions answered based on market trends, historical performance and current global conditions. Use this data to identify potential currency risks, understand how the exchange rate impacts your decisions, unlock better timing for your transfers and optimize your foreign exchange strategy.
Canadian Dollar Forecast - December 2025
The Canadian dollar is holding relatively steady after a volatile autumn, closely tied to the exchange rate dynamics. The Bank of Canada remains patient, while markets expect the Federal Reserve to begin easing more aggressively in 2026. Oil prices in the low-to-mid US$60s offer modest support, though softer domestic data continues to limit CAD’s broader upside.
- Short-term tone: CAD is range-bound as weaker domestic data offsets support from firm risk sentiment and stable energy prices.
- Rate expectations: Markets expect the BoC and Fed to ease within a similar window in 2026, reducing the USD-carry advantage.
- Trading ranges: USD/CAD holds in the high-1.30s to low-1.40s; EUR/CAD and GBP/CAD remain in well-defined multi-month ranges.
- Strategic guidance: Importers and exporters should use layered hedging and rate alerts, securing forward cover during periods of CAD strength.
CAD Forecast Snapshot
| Pair | Current Range | 2025 Year-End Forecast |
|---|---|---|
| USD/CAD | 1.37 – 1.41 | ~1.36 |
| EUR/CAD | 1.59 – 1.65 | ~1.61 |
| GBP/CAD | 1.83 – 1.88 | ~1.84 |
USD/CAD Forecast - December 2025
USD/CAD is trading in the upper 1.38s as the USD softens on expectations of deeper Fed rate cuts next year. CAD remains capped by weaker domestic growth, a still-wide yield gap and only modest support from oil markets.
Canadian banks continue to see a gradual grind lower in USD/CAD over the next 12 months. Most forecasts point toward a mid-1.30s setting by late-2026. Near term, a 1.37–1.41 range remains the base case, with dips possible if US data weakens and rate-cut expectations strengthen.
Banks view CAD as modestly undervalued but not positioned for a sharp rally. A softer USD environment, narrowing yield differentials and steady commodities support gradual CAD gains. Businesses should treat any move toward the low-1.30s as an opportunity to secure hedges for 2026 obligations.
USD/CAD Forecasts - December 2025
| Bank | Spot (Dec 2025) | Q4 2025 (forecast) | Q1 2026 (forecast) | Q2 2026 (forecast) |
|---|---|---|---|---|
| RBC | 1.38 | 1.37 | 1.36 | 1.35 |
| CIBC | 1.38 | 1.39 | 1.36 | 1.36 |
| Desj. | 1.38 | 1.36 | 1.35 | 1.34 |
| TD | 1.38 | 1.38 | 1.37 | 1.36 |
| BMO | 1.38 | 1.38 | 1.37 | 1.36 |
| Average | 1.38 | 1.38 | 1.36 | 1.35 |
EUR/CAD Forecast - December 2025
EUR/CAD is trading near the top of its multi-month range, reflecting changes in the exchange rate. Europe’s growth is stabilizing, and relative fundamentals versus Canada continue to support the euro. Softer Canadian domestic indicators help maintain EUR/CAD’s upward bias.
Banks expect the EUR/CAD exchange rate to remain in a stable corridor, finishing the year near the low-1.60s. Only modest CAD appreciation is anticipated through 2026 unless Canadian economic momentum strengthens more meaningfully.
EUR/CAD Forecasts - December 2025
| Bank | Spot (Dec 2025) | Q4 2025 (forecast) | Q1 2026 (forecast) | Q2 2026 (forecast) |
|---|---|---|---|---|
| RBC | 1.62 | 1.60 | 1.62 | 1.63 |
| CIBC | 1.62 | 1.62 | 1.63 | 1.63 |
| Desj. | 1.62 | 1.59 | 1.58 | 1.58 |
| TD | 1.62 | 1.65 | 1.64 | 1.63 |
| BMO | 1.62 | 1.63 | 1.62 | 1.62 |
| Average | 1.62 | 1.62 | 1.62 | 1.62 |
GBP/CAD Forecast - December 2025
GBP/CAD is trading in the mid-1.80s, supported by relatively higher UK yields and improved economic stability in Britain. In contrast, softer Canadian economic momentum keeps CAD from fully benefiting during periods of global risk-on sentiment, affecting the exchange rate dynamics.
Banks expect GBP/CAD to remain within a 1.83–1.88 band through early 2026. Sterling remains resilient thanks to UK rate differentials and structural flows. Over 12 months, modest CAD appreciation may pull the pair slightly lower but not significantly.
GBP/CAD Forecasts - December 2025
| Bank | Spot (Dec 2025) | Q4 2025 (forecast) | Q1 2026 (forecast) | Q2 2026 (forecast) |
|---|---|---|---|---|
| RBC | 1.85 | 1.82 | 1.86 | 1.88 |
| CIBC | 1.85 | 1.84 | 1.85 | 1.86 |
| Desj. | 1.85 | 1.78 | 1.75 | 1.76 |
| TD | 1.85 | 1.87 | 1.88 | 1.88 |
| BMO | 1.85 | 1.88 | 1.86 | 1.86 |
| Average | 1.85 | 1.84 | 1.84 | 1.85 |
Written by
Michael Watt
Foreign Exchange SpecialistMichael Watt is a Senior Corporate FX Specialist at MTFX, supporting Canadian businesses with strategic foreign exchange solutions and efficient cross-border payment workflows. With extensive experience in global financial services and client advisory roles, he helps companies improve international payment efficiency, reduce FX costs, and navigate currency market volatility. Michael brings a strong background in relationship management, business development, and international finance.
