The GBPCAD exchange rate could decline further as the UK government threatens a wealth tax to plug holes in the government’s finances.
The GBPCAD was strongly rejected at the 1.8782 level and has bounced weakly from 1.8550. The data on Friday could set up a move toward 1.8300-400 next week.
There is some medium-strength GBP data at 2pm HKT on Friday, with a previously released GDP growth number. Friday’s number may not diverge far from analysts’ expectations and the day may be quiet as traders await jobs data for Canada in the evening. But the recent downward move in the pound could have further to go if investors see the Canadian dollar as the more stable investment option of the two.
The UK government has been under fire for some poor handling of the economy, policy reversals, and its recent talk of a wealth tax has the country reeling. Recent data has shown that elite property prices have fallen in London, with 16,500 millionaires leaving the country, and others may follow. A wealth tax could add to that trend and add serious pressure to the UK growth picture.
The UK has also lost the most billionaires of any country in the world over the last two years, according to new data. That is adding to the fears of further exits if the government seeks to tax the rich further. Data from the New World Wealth said the UK lost a quarter of its billionaire population over the course of 2023 and 2024, which was even higher than sanction-hit Russia.
The Canadian dollar has been struggling against the US dollar in recent days and that highlights the underlying weakness in the pound. Canada’s currency touched a 12-day low against the greenback as the US currency shrugged off the latest US tariff threats. The Canadian dollar has been able to avoid any serious damage from the US import costs, but investors are starting to believe the dollar selling went too far.
Strength in the Canadian jobs market overnight on Friday could see further strength in the CAD next week with the levels well-defined for support.
