GBP/CAD Near-term Forecast: Destined for 1.72

Image © Bank of Canada

The Pound has registered two consecutive weekly declines against the Canadian Dollar and could see further weakness in the coming days and weeks.

This is according to the latest technical studies from a leading Canadian FX strategist.

"GBPCAD has weakened materially after reaching (and slightly exceeding) the 1.7537 bull target noted previously, which was derived from the bullish, inverted H&S pattern," says Shaun Osborne, Chief FX Strategist at Scotiabank.

"The GBP has slipped out of the upward-sloping trend channel in place since late March after closing softly on the week through last Friday," he adds.

Image courtesy of Scotiabank. Track GBP/CAD with your own alerts, find out more here.

The Pound has been one of 2024's best-performing currencies, benefiting from a UK economic revival and fading expectations for a Bank of England interest rate cut.

However, the odds of a rate cut in August rose following last week's Bank of England policy update, which showed a number of members of the Monetary Policy Committee were close to voting for a rate cut.

The Pound can stay pressured against the Canadian Dollar as long as the odds of an August cut rise further.

Osborne's short-term trend strength studies have weakened and the daily DMI is all but flat (neutral).

"The soft close on the week was not a strongly bearish signal but, after the GBP’s run higher in the past few weeks, some consolidation would not surprise. Support is 1.7350; losses below here may see the GBP ease back to the 1.72 area," says Osborne.