The GBP/CAD currency pair settled below recent high of 1.8496, its strongest level since April 4th, after the latest inflation data out of the United Kingdom and the Bank of Canada’s policy decision.

The Pound faced downward pressure this week following a softer-than-anticipated UK inflation reading.

Annual inflation rate in the UK has slowed to 2.6% in March from 2.8% in February, against market consensus and the BoE’s forecasts of 2.7%.

UK’s annual core CPI inflation, which excludes volatile categories such as food and energy, slowed to 3.4% in March, or the lowest rate since December, from 3.5%.

Easing inflationary pressure has added to expectations that the BoE might be inclined to adopt a more accommodative monetary policy stance, potentially including interest rate cuts in the future.

Meanwhile, the Bank of Canada kept its benchmark interest rate without change at 2.75% at its April 16th policy meeting, in line with market consensus.

That followed 225 basis points of rate cuts since the beginning of the monetary easing cycle in June 2024.

BoC policy makers noted that the unpredictability on the magnitude of tariffs heightened downside risks on growth and raised inflation expectations.

In case the US limits the scope of its tariffs on Canada, the BoC projects growth to temporarily slow and inflation to stay in proximity to the 2% target.

And, in case the US proceeds with an all-out trade war with Canada and China, the central bank projects a recession this year and inflation near 3%.

The BoC’s cautious stance has cemented expectations of a stable monetary framework in Canada.

The GBP/CAD currency pair settled 0.26% higher at 1.8389 on Friday.

The minor Forex pair gained 1.48% for the week.