CFD Trading Rate Great Britain Pound vs Canadian Dollar (GBPCAD)

• GBP/CAD is pulling back in a short-term downtrend, however, it is likely to resume its bearish bias. 
• The pair recently broke down out of a bearish Rising Wedge but downside targets have yet to be hit. 

GBP/CAD has broken out of a bearish Rising Wedge pattern and started to decline. Although it is pulling back at the moment, it is expected to eventually continue falling towards the pattern’s downside targets. 

GBP/CAD Daily Chart 

A break below the 1.7700 November 14 low would probably confirm further weakness to the next target at 1.7518, the 61.8% extrapolation of the width of the Rising Wedge at its widest part extrapolated lower. This is the usual technical method for forecasting breakouts. 

Prior to the breakdown, GBP/CAD broke temporarily above the upper guardrail of the Rising Wedge pattern on several occasions (blue circles on chart) on September 20 and November 1. This is a sign of bullish exhaustion and an early warning of impending reversal. 

• GBP/CAD is breaking out of its Rising Wedge pattern and declining. 
• It will probably continue towards the pattern’s downside targets.  

GBP/CAD is breaking decisively out of a Rising Wedge pattern and declining quite quickly. 

GBP/CAD Daily Chart 

It has breached the 1.7871, November 6 low, indicating a probable confirmed breakout. The next target to the downside is 1.7719, the October 3 swing low. 

A break below that would probably initiate further weakness to the next target at 1.7518, the 61.8% extrapolation of the width of the Rising Wedge at its widest part extrapolated lower. This is the usual technical method for forecasting breakouts. 

GBP/CAD broke temporarily above the upper guardrail of the Rising Wedge pattern on several occasions (blue circles on chart) on September 20 and November 1. This is a sign of bullish exhaustion and an early warning of impending reversal. 

• GBP/CAD might be completing a bearish Rising Wedge price pattern.
• If so, there is an increased risk of a downside break. 

GBP/CAD recovers to trade back inside its Rising Wedge pattern after temporarily falling below the lower boundary line. It remains vulnerable to a downside break. 

Rising Wedges are bearish patterns. Although there is no way of confirming GBP/CAD has formed one for sure it looks likely that it has.

GBP/CAD 4-hour Chart 

A break below the lower boundary line and then below 1.7871 (November 6 low) would probably confirm a decisive breakdown and lead to a decline to 1.7719, the October 3 swing low. 

GBP/CAD broke temporarily above the upper guardrail of the Rising Wedge pattern on several occasions (blue circles on chart) on September 20 and November 1. This could be a sign of bullish exhaustion and an early warning of impending reversal. 

• GBP/CAD falls to the lower boundary of a bearish price pattern. 
• A clean break lower could indicate the start of a new downtrending cycle. 

GBP/CAD falls to the lower boundary line of a Rising Wedge pattern and the level of the (red) 50-day Simple Moving Average (SMA) at about 1.7826. Rising Wedges are usually bearish patterns, however, there is no way of confirming this is such a pattern, although it looks very much like one.

GBP/CAD Daily Chart 

A decisive break below the lower boundary line could see a decline to about the level of the 200-day SMA at around 1.7487. Further bearishness could lead to a move down to a target at 1.7364.

A break below the red dashed line on the chart at the key 1.7719 October 3 swing low would provide more cast-iron confirmation of a breakout and reversal in the medium-term uptrend. 

GBP/CAD broke temporarily above the upper guardrail of the Rising Wedge pattern on several occasions (blue circles on chart) on September 20 and November 1. This could be a sign of bullish exhaustion and an early warning of impending reversal. 

The Moving Average Convergence Divergence (MACD) momentum indicator has been flat recently but looks poised to break lower – a mildly bearish sign on the chart.

• GBP/CAD weakens over a percent at the open on Monday due to markets still expecting the Bank of England to cut interest rates. 
• This comes despite substantially higher inflation forecast for 2025 due to the government’s autumn Budget. 
• Canadian data improves mildly helping to reduce losses for the currency ahead of BoC meeting on Tuesday when more cuts are expected. 

GBP/CAD, which measures the purchasing power of a single Pound Sterling (GBP) in Canadian Dollars (CAD), trades in the 1.8020s on Monday, about a one percent drop from its closing price on Friday. 

Sterling’s steep decline against the Canadian Dollar over the space of a single weekend is partly due to an easing in the Pound’s volatility following the UK autumn Budget, and glimmers of hope offered by recent Canadian economic data releases, which might show green shoots of renewal after a prolonged period of weakness. 

GBP/CAD fell immediately following the UK Budget on Wednesday as investors sold the Pound due to the increase in government borrowing implied by the Budget. UK government borrowing has already oustripped forecasts by 7 billion (GBP) in the first six months of 2024, according to Reuters, and the Budget will add another 32 billion (GBP) in borrowing per year, according to the Office of Budgetary Responsibility (OBR). 

GBP/CAD Daily Chart 

On Friday, however, GBP/CAD rebounded as the Chancellor and her deputy reassured markets via media interviews of the soundness of their figures, and the Pound recovered.

The OBR forecasts higher inflation due to the Budget, mainly as a result of an increase in the minimum wage and substantial government spending, and this makes it likely the Bank of England (BoE) will need to keep interest rates higher for longer. This, in turn, is positive for the Pound as it increases foreign capital inflows. This contributed to GBP/CAD rallying to a six-week high on Friday. 

On Monday the Pound is falling once again, however, amid continued expectations that although inflation is likely to rise – to 2.6% in 2025 from 1.5% previously, according to the OBR – this will not prevent the BoE from cutting interest rates by 25 basis points (bps) at their meeting on Thursday. Such a cut would be negative for Sterling as it lowers capital inflows. 

The recent weak flow of macroeconomic data for the UK is the reason the BoE is likely tp press ahead with a 0.25% cut to interest rates at its meeting on Thursday. 

“Next week, the BoE meeting will take center stage. Weaker-than-expected data should see the MPC cut by 25 bps.  Still, as a result of the budget, the MPC is likely to maintain its gradual easing message,” said Klaus Baader, Global Chief Economist, Societe Generale, in a note on Friday. 

The Canadian Dollar (CAD) has seen substantial weakness in recent months due to the Bank of Canada (BoC) aggressive easing policy. The BoC has slashed its cash rate from 5.00% in May 2024 to 3.75%. This includes a double-dose 50 bps (0.50%) cut in October. Markets are further betting the BoC might cut by another 50 bps at its meeting on Tuesday. At the same time CAD may gain some support from the view that the worst might be over for the Canadian economy and that after the next interest rate cut the BoC will take a more relaxed approach to easing. 

Canadian data has shown a mild improvement over recent months, arguably because of the timely action taken by the central bank to reduce interest rates. The S&P Global Canada Manufacturing PMI rose to 51.1 in October from 50.4 in the previous month, “the second consecutive expansion in Canadian factory activity after 17 consecutive monthly contractions,” according to Trading Economics. Canadian GDP has shown modest growth over recent months and Small Business Optimism has also bounced. 

That said, not all analysts are optimistic about the outlook for the Canadian economy. 

“We think Friday’s Canadian employment report should tell a familiar story—that the labor market has continued to weaken in October amid slowing hiring demand. Employment is still expected to increase, but not by much. We expect 15,000 jobs were added, but that would again undershoot growth in the labor force and population, and push the unemployment rate back up to 6.6% after a tick lower to 6.5% in September,” says  Nathan Janzen, Assistant Chief Economist at RBC.

A further factor is Crude Oil, which is rebounding from its recent multi-month lows in the $60s (WTI Crude Oil) and is trading back above $70 per barrel again amid OPEC constraints. This impacts demand for CAD because Oil is the country’s largest export. 

• GBP/CAD is climbing higher within what could be a Rising Wedge price configuration. 
• It is currently finding support at the 50-day SMA. 
• A decisive break lower could signal substantial further weakness. 

GBP/CAD continues trading higher in what looks like a Rising Wedge pattern. Within the confines of the pattern’s borders the pair is finding support at the (red) 50-day Simple Moving Average (SMA) at about 1.7879. 

GBP/CAD Daily Chart 

GBP/CAD will probably respect the borders of the pattern and continue rising in line with the medium and long-term bull trend. The short-term trend is less clear and could be classed more specifically as sideways. 

A decisive break below the lower trendline of the Rising Wedge would probably signal the start of a steeper descent. Such a breakout lower would be confirmed by a close below 1.7700, and would probably result in a move down to support at the 200-day SMA at around 1.7445. 

• GBP/CAD extends its correction to fresh lows following lower-than-expected UK inflation data. 
• The 1.7% rise in prices in September falls below the BoE’s 2.0% target. 
• It increases the probability the BoE will cut interest rates decreasing foreign capital inflows and demand for Sterling. 

GBP/CAD rolls over on Wednesday and declines almost half a percent to the mid 1.7900s. The fall is caused by the release of lower-than-expected inflation data from the UK – which showed headline inflation falling to 1.7% – as this put downside pressure on the Pound Sterling (GBP). 

Cooler inflation increases the likelihood that the Bank of England (BoE) will cut interest rates, and lower interest rates are negative for Sterling as they reduce foreign capital inflows. 

Before the release it was unclear whether the BoE would go ahead with an interest rate cut at their next meeting in November, mainly due to stubbornly high services inflation, however, Wednesday’s figures increase the odds the bank will go ahead with a 25 basis point (bps) (0.25%) rate cut. 

Wednesday’s data showed that both core and services sector inflation cooled in September, falling to 3.2% and 4.9% respectively. Core fell from 3.6% in August and was below the 3.4% expected; services fell from 5.5% in August, reaching its lowest level since May 2022. 

Bailey vindicated

Last week the Pound depreciated after the Governor of the BoE, Andrew Bailey said the bank should get more “activist” and “aggressive” about cutting interest rates which, at 5.0%, are one of the highest amongst western developed countries. 

Although the BoE’s Chief Economist Huw Pill calmed markets on the day after Bailey’s speech – saying the bank should still act with caution when it came to lower interest rates, September’s data suggests Bailey was accurate in his assessment. After all, headline inflation has now fallen well below the BoE’s 2.0% target. 

GBP/CAD Daily Chart

Downside for GBP/CAD may be limited, however, given similarly weak inflation data from Canada.  

Data out on Tuesday, for example, showed that the Canadian headline Consumer Price Index (CPI) declined to 1.6% annually in September, from 2.0% in August, and below estimates of 1.8%. This, in turn, suggests the Bank of Canada (BoC) will cut interest rates again (after three consecutive 25 bps cuts already) at its next meeting on October 23. 

The fall in Canadian inflation was mainly caused by a 10.7% decline in gasoline prices in September, and also affected related sectors such as transportation (down 1.5%). It marked the second month that headline inflation has fallen below the bank’s 2.0% target. Lower Crude Oil prices were responsible for the decline in gasoline prices. Oil also happens to be Canada’s largest export commodity. This, in turn, undermines the Canadian Dollar (CAD) and is a bullish factor for the GBP/CAD pair. 

Trump says he would rip up free trade agreement with neighbors

The Canadian Dollar could be facing headwinds after comments by former president Donald Trump, in which he said that he would pursue a radical “America First” if elected in November. 

In an interview with Bloomberg News, Trump said he would act to stop cheap Chinese cars from flooding the US market via carmakers nearshoring in Mexico as this was killing the US auto industry. Mexico has a free trade agreement with the US and Canada (USMCA), however, Trump suggested he would rip this up if he were made President. There is a risk Trump could also extend the trade war to the north and place heavy tariffs on Canadian goods, although the US does rely on Canadian Oil, suggesting it could be spared the same treatment as Mexico. 

Trump’s comments carried all the more bite because he is now the favorite to win the election according to betting websites. OddsChecker puts his chances at 58% to Vice-President Kamala Harris’s 42%. Trump is still lagging in the polls however, which show Harris leading with 48.5% versus Trump’s 46.1%, according to website FiveThirtyEight. 

• GBP/CAD rises back above an old trendline and extends its rally. 
• The pair extends its rally within a medium and long-term rising channel.

GBP/CAD looks like it has bottomed out and is once more rising within a broader rising channel. 

The pair was falling in a down leg, however, it has probably reversed and started a new uptrend. Given the principle that “the trend is your friend” the odds favor more upside to come. 

GBP/CAD 4-hour Chart 

Although the pair broke below an important trendline (“Trendline A” on chart) on October 3. It quickly bottomed out and has since recovered. Now it has also broken back above the same trendline, reversing the short-term downtrend in the process.

The Moving Average Convergence Divergence (MACD) indicator is now above the zero line adding further bullish evidence to the chart. 

GBP/CAD is further supported by the fact that it is in medium and longer-term uptrending cycles.

• GBP/CAD returns to the underside of a trendline it has broken below. 
• The pair is consolidating after falling within a rising channel. 

GBP/CAD is pulling back after unfolding a partial down-leg within a broader rising channel. It is probably in a short-term downtrend, which given the principle that “the trend is your friend” marginally favors more downside. 

The pair broke below an important trendline (“Trendline A” on chart) on October 3. It then bottomed out and has since recovered back up to the underside of the trendline. 

GBP/CAD 4-hour Chart 

GBP/CAD is at a critical turning point: it could either break back above the trendline, thereby reversing the trend, or roll over and continue lower. 

A break below the base of the consolidation (dashed line on chart) would indicate a continuation down leg. Such a move would be expected to reach an initial downside target at 1.7620 (Fibonacci 61.8% of the height of the range extrapolated lower), followed by about 1.7605 (September 4 lows). 

A decisive break back above the trendline, on the other hand, would suggest a reversal of the trend. This is possible given the medium and longer-term trends are bullish and the pair is in a rising channel. Further, the Moving Average Convergence Divergence (MACD) has crossed above its signal line and is rising steeply, indicating strong upside momentum accompanies the current move. 

In order to be decisive such a break would have to be accompanied by a long green candlestick that pierced well clear of the trendline and closed near its high, or three green candlesticks in a row that broke clearly above the trendline. 

• GBP/CAD has declined sharply within a rising channel. 
• The pair is likely to continue lower as the counter-trend reaction runs its course. 

GBP/CAD is unfolding a down leg within a rising channel. It will probably continue lower to at least the blue 100-day Simple Moving Average (SMA) at 1.7641. A break below the 1.7720 October 3 low would cement bearish bets. 

The pair is in a short-term downtrend and given the principle that “the trend is your friend” the odds favor a continuation of that trend. 

GBP/CAD Daily Chart 

Subsequent downside targets lie at 1.7603 (September 4 low) and 1.7407 (August 8 low). In the most bearish scenario price could fall to the lower channel line at 1.7375. 

That said, short-holders are advised to exercise caution as GBP/CAD is in an uptrend on the medium and long-term timeframes, as it oscillates higher within an ascending channel. There is a risk, therefore, of a reversal higher occurring unless the current sell-off marks the beginning of a deeper downtrend. This is possible given its steepness. 

The Moving Average Divergence Convergence (MACD) has crossed sharply below its signal line providing added bearish confirmation. 

The formation of a bearish Shooting Star Japanese candlestick reversal pattern on September 20 (orange rectangle on chart above) gave the first signs of weakness. It then consolidated for a while before starting to fall properly on October 1.

• GBP/CAD is undergoing a sharp decline within a rising channel. 
• It is likely to continue lower as the counter-trend reaction runs its course. 

GBP/CAD is unfolding a down leg within a rising channel. It will probably continue lower to at least the blue 100-day Simple Moving Average (SMA) at 1.7641. 

The pair is in a short-term downtrend and given the principle that “the trend is your friend” the odds favor a continuation of that trend. 

GBP/CAD Daily Chart 

Subsequent downside targets lie at 1.7603 (September 4 low) and 1.7407 (August 8 low). In the most bearish scenario price could fall to the lower channel line at 1.7375. 

GBP/CAD is in an uptrend on the medium and long-term timeframes, as it oscillates higher within an ascending channel. There is a risk, therefore, of a reversal higher occurring unless the current sell-off marks the beginning of a deeper downtrend. This is possible given its steepness. 

The Moving Average Divergence Convergence (MACD) has crossed below its signal line providing added evidence that prices are going to push lower. 

The first signs of weakness came when the pair tested the upper channel line and formed a bearish Shooting Star Japanese candlestick reversal pattern on September 20 (orange rectangle on chart above). It then consolidated for a while before starting to fall properly on Tuesday.

• GBP/CAD may be beginning a bearish phase after touching the top of its channel and reversing lower. 
• It is showing bearish divergence with momentum. 

GBP/CAD might have reversed its short-term uptrend after testing the top of its rising channel, forming a bearish reversal candlestick pattern (orange rectangle on chart below) and then establishing a sequence of lower lows and lower highs. 

GBP/CAD 4-hour Chart 

Although GBP/CAD has pulled back over recent periods, it has probably reversed trend and a break below 1.7946 (September 25 low) would confirm more downside. Downside targets lie at 1.7754 (September 17 low and 50-day SMA), 1.7694 (September 16 low) and 1.7603 (September 4 low) and 1.7407 (August 8 low). A break below 1.7907 would provide stronger confirmation. 

Although GBP/CAD is in an uptrend on all time frames, it is nevertheless oscillating within an ascending channel. It is possible, therefore, that it may be entering one of its counter-trend bear phases. 

The Relative Strength Index (RSI) has formed a bearish divergence with price compared to the September 17 low (red dashed line on chart above). Although the price was much lower on September 17 momentum was not. This suggests underlying weakness could push prices down. 

A break above the high of the Shooting Star at 1.8245 would confirm a resumption of the uptrend. If so, the next target lies at 1.8278, the 61.8% extrapolation of the prior move higher. 

Any further bullishness beyond the confines of the channel is likely to be short-lived, however. Such moves are signs of “exhaustion” and are a precursor to deeper corrections on the horizon.

• GBP/CAD is showing signs that it may be about to reverse lower. 
• The pair formed a bearish candlestick pattern and has since declined.

GBP/CAD is threatening to reverse its uptrend after testing the upper channel line of its long-term rising channel and forming a bearish reversal candlestick pattern (orange rectangle on chart below). 

GBP/CAD 4-hour Chart 

GBP/CAD formed a bearish Shooting Star Japanese candlestick pattern on both the Daily and 4-hour charts on September 20 after a false break above the upper channel line. The subsequent weakness suggests this candlestick may mark a top of the pair.

Although GBP/CAD is in a strong uptrend on all time frames, it is rising and falling within a channel and there is a growing chance the pair may be entering one of its counter-trend bear phases. 

A break below 1.7949 (September 19 low) might confirm a reversal of the short-term trend and lower prices to come. A break below 1.7907 would provide stronger confirmation. Downside targets lie at 1.7754 (September 17 low and 50-day SMA), 1.7694 (September 16 low) and 1.7603 (September 4 low) and 1.7407 (August 8 low).  

The Relative Strength Index (RSI) is also forming a bearish divergence with price compared to the September 17 low (red dashed line on chart above). Although the price was much lower on September 17 momentum was not, rather it is lower now. This suggests underlying weakness could push prices down. 

A break above the high of the Shooting Star at 1.8245 would probably confirm that price is going even higher. If so, it might reach a target at 1.8278, the 61.8% extrapolation of the prior move higher. 

Any further bullishness beyond the confines of the channel is likely to be short-lived, however. Such moves are signs of “exhaustion” and are a precursor to deeper corrections on the horizon.

• GBP/CAD has formed a bearish candlestick pattern after briefly breaking above a channel line. 
• This could be a sign a pullback is about to unfold, however, downside pressure has been limited so far. 

GBP/CAD has temporarily broken above the upper channel line of a long-term rising channel before falling back down and closing (on Friday) near where it opened. 

The pattern thus formed is a Japanese Shooting Star candlestick (orange rectangle on chart below) which is a short-term bearish sign, especially if followed up by a bearish down day, as seems to be the case (so far) on Monday. 

GBP/CAD Daily Chart 

That said, GBP/CAD is in an uptrend on all three major time frames – the short, medium and long-term. This suggests that overall the “current” is flowing north. Given it is a principle of technical analysis that “the trend is your friend” this would suggest the odds continue to favor more upside.

However, GBP/CAD is also showing bearish divergence with the Moving Average Convergence Divergence (MACD) momentum indicator (red dashed lines). Although the price has risen to a much higher peak compared to July 12, the MACD is actually lower. This is a bearish sign and suggests a higher chance of a pull back evolving. Given the strong overarching uptrend, however, the pullback might just be a temporary sell-off.

If there is a correction, however, it might reach the 50-day Simple Moving Average (SMA) at 1.7753. 

Alternatively, a break above the high of the Shooting Star at 1.8245 would probably confirm that price is going even higher. If so, it might reach a target at 1.8278, the 61.8% extrapolation of the prior move higher. 

Any further bullishness beyond the confines of the channel is likely to be short-lived. Such moves often signal “exhaustion” and are a precursor to deeper corrections on the horizon.