Canadian 5 Bank Forecast, April 2025

The euro has remained relatively strong against the Canadian dollar in recent weeks, supported by improved sentiment in the eurozone and contrasting economic momentum in Canada. While the European Central Bank continues to gradually ease policy in response to subdued inflation and sluggish growth, the euro has benefited from its relative stability and safe-haven status. In contrast, Canada faces growing economic headwinds, including the impact of renewed US tariffs on key exports, weakening business confidence, and rising concerns about a potential recession. Although the Bank of Canada is expected to hold rates steady for now, softer domestic data and uncertainty around trade policy have put pressure on the loonie. As a result, the EUR/CAD pair is expected to stay within a relatively stable range through April and into May, though volatility may increase as markets react to shifting global conditions and diverging central bank paths.

The British pound has experienced volatility against the Canadian dollar in recent weeks, currently trading around 1.81 CAD per GBP. This fluctuation reflects a combination of domestic economic challenges in the UK and broader global uncertainties. The UK economy is grappling with the ramifications of recent US tariffs, which have disrupted trade and heightened inflationary pressures. These developments have prompted the Bank of England to consider monetary policy adjustments to mitigate potential economic slowdowns. Concurrently, the Canadian dollar has shown relative stability, supported by steady commodity demand and a cautious stance from the Bank of Canada. These factors suggest that the GBP/CAD exchange rate could remain volatile in the near term, driven by changing economic policies and global trade developments.