The GBP/CAD currency pair, which expresses the value of the British pound sterling in terms of the Canadian dollar, has managed to continue to fend off long-term lows over the past few years. However, in spite of Brexit (the U.K.’s decision to leave the European Union, which was announced on 23 June 2016), GBP/CAD has in fact managed to continue to trade above the lows of 2010 to 2013.

The long-term monthly candlestick chart below illustrates price action from as early as January 1975. Two levels are highlighted: 1.60 and 1.50. GBP has managed to safely avoid the 1.50 handle since the announcement of Brexit, although current prices above the 1.70 handle are still a far cry from the highs above 2.00 in the latter half of 2015 (and early part of 2016).

GBP/CAD Historical Price Action(Source: TradingView. The same applies to all subsequent candlestick charts presented hereafter.)

If we focus on more recent years, since 2000, we can see that GBP/CAD has fallen from highs above 2.50 down to levels under 1.50, and yet in spite of this the 10-year yield spread (the blue line, in the chart below) is currently back to where it used to be at its high. Yet clearly prices are still languishing far below the highs above 2.50 (found in 2002, 2003 and 2004).

GBP/CAD vs. 10-year Yield SpreadThe 10-year yield spread rose fairly consistently from the year 2000 into mid-2008, yet GBP/CAD continued to trade through this period. The 2008/09 Great Recession saw markets continuing to prefer CAD over GBP, all the way into the exchange rate’s long-term lows under 1.50 (in 2010). Currently, the 10-year yield spread is once again negative (albeit above more recent lows in 2018).

The bond market’s 10-year yield spread is negative 35 basis points (pictured above, on the far-right y-axis). This compares