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Pound to Canadian dollar (GBP/CAD) upside favoured, albeit with limited scope for gains.
GBP/CAD enters the new week with the technical picture tilted modestly in favour of sterling, although the pair remains trapped inside the same broad range that has defined trading for more than a year.
The pair is at 1.86 at the time of writing, making for a small daily gain that builds on Friday's 0.19% advance, a move that brings the 1.86650 line into play for the coming days.
A successful break of this level then opens the door to 1.8700 resistance in the days ahead, while support around 1.8500 is expected to attract buyers on dips.
A decisive break above 1.8700 would represent a significant bullish development and open the door toward 1.89–1.90, but until that occurs, the most likely outcome remains range trading with a modest sterling-positive bias.
Note that the 100-day moving average - the blue line in the daily chart - is as flat as a pancake, which means price action will most likely revert back to the 100-day. In short, it argues for the current spell of upside to be limited in extent and duration.
But, arguing in favour of an eventual break is the bigger picture view, conveyed by the weekly chart:
The weekly chart is particularly instructive because it shows GBP/CAD continues to hold above its rising 100-week moving average near 1.83 and remains comfortably within the long-established 1.8350–1.8700 range.
Importantly, the March selloff failed to break the range floor, reinforcing the idea that the broader uptrend has paused rather than reversed.
So from that perspective, sterling bulls still hold the upper hand, although we could yet be in an extended spell in the consolidation zone between 1.87 and 1.8350.
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The coming week brings with it Canada's employment numbers, due for release Friday.
The report tracks the net number of jobs created or lost in the country and is projected to show a modest gain while economists expect the jobless rate to hover around 6.9%
That's supportive for CAD as it will keep the Bank of Canada on alert to the need to maybe adjust interest rates in the coming months in response to rising inflationary pressures.
However, an undershoot that leads to disappointment would signal the labour market is softening and is therefore not an inflationary threat. The Bank of Canada might therefore be inclined to hold interest rates for a protracted period.
That would put the CAD under pressure against currencies belonging to central banks more inclined to raise interest rates.
We'll get a flavour of where the UK is headed as the Bank of England's Governor, Andrew Bailey, is scheduled to speak on three occasions:
Tuesday 2 June (3:00 pm): Oral evidence to the Lords Economic Affairs Committee in Parliament. Thursday 4 June (4:40 pm): Headline speech at the Investment Association Annual Conference 2026. Friday 5 June (7:00 pm): "In conversation" with economists Ed Balls and Stephanie Flanders at the 250th Anniversary of Adam Smith's Wealth of Nations event in Kirkcaldy, Scotland.
He should give an updated view on what the Bank is thinking regarding inflation and the future of interest rates.
Here, the message should be that the Bank expects inflation to rise in the coming months, but that it's been encouraged by May's undershoot in the inflation data.
That should be enough to keep the market confident that the Bank will raise rates on at least two occasions this year.
That should keep UK short-dated bond yields relatively supported, which in turn can help GBP/CAD test the upper limits of its recent range.
