This is a question that's asked quite often, especially by people who might have to rely on their unit to navigate in bad weather.

So, does bad weather affect GPS signal?

The answer is yes and no – Yes it does have an effect on the signal but not that a standard user would notice under normal conditions.

The argument put forth by many is that since the GPS signal is in the microwave region of the EM spectrum and that microwave radiation is absorbed by water, then rain, snow and clouds should degrade the signal quality. The truth of the matter is that the GPS signal frequency, which is about 1575 MHz, was chosen specifically because it represents a "window" in the weather as far as signal propagation is concerned. In other words, as far as the GPS signal is concerned, an atmosphere loaded with water vapor and rain is virtually transparent to it.

However, note how I said that the standard user is unlikely to see any degradation "under normal conditions". If the signal they are receiving is poor because of other environmental factors (such as trees, valleys and so on) then bad weather might turn a marginal GPS signal lock into a situation where they can no longer lock onto the satellite. Also, a coating of water on the receiver's antenna can degrade the signal significantly (a film of water is different to droplets of water or water vapor). Add to this the fact that trees can hold a lot of water and this can again act as a barrier to the signal (not to mention that some trees, especially pines with their needles, are very efficient microwave absorbers).

However, some people find that, if they have their GPS fitted near the windscreen of their car, they get a poorer signal when it rains. They put this down to the rain drops, and it's true that a thin film of water will block GPS signals, but a far more likely reason for a poorer signal is the wipers cutting across the signal periodically.

Reference: http://www.hacking-gps.com/articles.php?url=2&id=200503102031