GBP/CAD steady as markets digest mixed Canada employment report

The Canadian Dollar (CAD) trades little changed against the British Pound (GBP) on Friday, with GBP/CAD struggling to find direction as traders show a muted reaction to Canada’s latest employment report. At the time of writing, the pair trades around 1.8636, hovering near one-month highs.

Data released by Statistics Canada showed that Net Change in Employment rose by 8.2K in December, beating market expectations for a 5K decline, but easing sharply from November’s 53.6K gain. Meanwhile, the Unemployment Rate climbed to 6.8% from 6.5%, coming in above forecasts of 6.6%.

Wage growth also showed signs of cooling. Average Hourly Wages increased 3.7% YoY in December, down from 4.0%.

From a monetary policy perspective, the mixed jobs report is unlikely to materially alter near-term expectations for the Bank of Canada (BoC). Markets widely expect the central bank to keep interest rates on hold through much of 2026.

Although some analysts had pointed to the possibility of a rate hike toward year-end, the latest labour-market data, marked by rising unemployment and cooling wage growth, complicates that outlook and reinforces the case for a prolonged wait-and-see stance.

At its December meeting, the BoC left its policy rate unchanged at 2.25%, noting that the current setting is “about the right level.” Traders now look ahead to Canada’s inflation data due later this month, which could help shape near-term expectations for monetary policy.

In the United Kingdom, attention is turning to next week’s key economic releases, including labour-market data due on Tuesday and the monthly Gross Domestic Product (GDP) report for November scheduled for Thursday.

From a broader perspective, the interest-rate differential between the BoC and the Bank of England (BoE) continues to favour the Pound, keeping GBP/CAD tilted to the upside.

Meanwhile, the Canadian Dollar is also sensitive to the evolving oil backdrop. Washington’s expanding oversight of Venezuelan oil flows has raised expectations of higher global supply, reinforcing oversupply risks that could cap Oil prices and weigh on the Loonie, given Canada’s status as a major energy exporter.