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The pound-to-Canadian dollar exchange rate (GBP/CAD) retains a constructive feel and could advance over the coming week.
Ever since the start of August the pair has been displaying the classic features of a currency pair that is trending higher as it has recorded a series of higher highs and higher lows.
It peaked at 1.8841 on September 17 and has since pulled back. We could now be seeing the next leg higher as that pullback has played out and strength is rebuilding:
From here, an initial target would be 1.8841 ahead of a new 2025 high later in October.
GBP risks are nevertheless to be considered in the coming days as the UK's Labour Party holds its annual conference.
Expect it to be dominated by left-leaning headlines, particularly on the economics front, where we will hear calls for increased public spending.
The risk is that the Chancellor, Rachel Reeves, ultimately caves to these calls and increases the UK's growing deficit.
The worst-case outcome would be another crash in yields and the pound, similar to that of Liz Truss's mini-budget fallout of 2022.
For the Canadian Dollar, much will depend on what the USD does.
As regular readers will know, GBP/CAD has tended to track GBP/USD in 2025, which simply means the recent bout of USD strength has weighed on GBP/CAD and it means further USD strength will weigh further.
But, if USD falls back this week, then GBP/CAD can make a renewed push for those 2025 highs.
The U.S. labour market report at the end of the week will be the major event to keep an eye on, as a soft reading would bolster the case for further rate cuts at the Federal Reserve, in turn weighing on USD.
The market looks for approximately 55K jobs to have been added in September, meaning this is the bar that must be crossed.
Beware, though: U.S. data has been coming in at above-consensus levels over the past month, signalling the economy risks performing better than anyone is expecting going into year-end.
It raises the odds of Friday's non-farm payrolls report beating expectations and lifting the dollar, and denying the GBP/CAD a shot at advancing.