GBP/CAD: Pressure Builds within Ascending Triangle Pattern

The GBP/CAD cross rose to test a key resistance level in early trading on Thursday before reversing. The pair has formed an ascending triangle pattern since the up move beginning on the 11th of October. Further resistance lies overhead at the 1.7138 level, defined by the prior high in May and low from February.

The British Pound has been buoyed by the lead of the Conservative Party in the polls. A Conservative majority being secured at the December election would likely underpin the British Pound, whereas a hung Parliament, or a Labour minority government would increase uncertainty surrounding Brexit and weigh on sterling. On Thursday, the Office for National Statistics (ONS) reported that UK retail sales fell in October, marking the weakest 3-month period since 2018. The worse than expected data dampened demand for sterling and stoked fears over the health of the UK economy.

Meanwhile, the Canadian dollar has been pressured by dovish rhetoric from the Bank of Canada. Markets now look to the speech by BoC Governor Stephen Poloz scheduled for Thursday at the Asia Economic Policy Conference (AEPC) in San Francisco. Falling oil prices weighed on the Canadian dollar early in the week, but crude has since recovered on the heels of comments from OPEC’s Mohammad Barkindo about slower US shale production growth in 2020.