Pound-to-Canadian Dollar Rate Breaks Down and Eyes Lower Levels as Brexit Haunts Sterling Again 

The Pound-to-Canadian Dollar rate was licking wounds near to its March crisis-period lows on Thursday but its recovery potential is limited at best, analyst forecasts suggest, while the prospective downside could grow further if the Loonie remains on its front foot and Wednesday's update from Brexit negotiators is anything to go by.

The Pound-to-Canadian Dollar rate rose Tuesday amid a strong rally in risk assets from stock markets to commodities, an unusual pattern of price action that suggests Sterling's star might've faded since it contracted the coronavirus and enabled the Loonie to move higher in the pecking order of major currencies.

The Pound-to-Canadian Dollar rate extended its 'sell in May and go away' retreat last week which took it back to the bottom of a multi-month range, although it faces the risk of further losses in the days and weeks ahead as political and economic headwinds tarr the outlook for the British currency.

The Pound-to-Canadian Dollar held above 1.70 for a fourth consecutive session Thursday but is in danger of unravelling again without meaningful losses for the Loonie in the weeks ahead, which could mean the oil market is as key for the GBP/CAD outlook as Brexit and the Bank of England (BoE).

The Pound-to-Canadian Dollar rate decline has been arrested by a cluster of notable technical support levels near 1.70 but nascent gains have been driven by the most whimsical of sentiment shifts while significant risks still lurk on the path ahead and threaten to push Sterling back to its March lows.

The Pound-Canadian Dollar rate fell heavily last week as the British currency ceded ground to all but one major rival, although its trials and tribulations are not over because the threat of even steeper losses lurks on the path ahead even if the pair does find itself tentatively supported early in the new week.

The Canadian Dollar outperformed many rivals Thursday after being lifted by an infectious optimism emanating from the oil market, which has helped the Loonie to keep a whimpering and wavering Pound Sterling under pressure and is now threatening even steeper downside for the GBP/CAD rate. 

The Pound-Canadian Dollar rate was testing support around 1.72 Wednesday but headwinds are mounting for the British exchange rate as the Loonie draws an algorithmic bid from a BMO Capital Markets financial model and the downside risks continue to stack up for Sterling.