The GBP/USD pair appears to be struggling to maintain its recent trend, and a pattern is forming on the chart that indicates a possible reversal.
The GBP/CAD pair made several failed attempts to break the minor psychological level of 1.7850 and is now testing the double neckline support around 1.7700.
Will we see a decline and downtrend soon?
GBP/CAD currency pair on 4-hour chart Chart by TradingView
Some of the UK economic data released this week appears to have sent the pound lower, as traders look ahead to another potential interest rate cut by the Bank of England.
In particular, the average earnings index came in below market estimates, indicating weak inflationary pressures, while the monthly GDP reading came in weaker than expected. Core data, including the goods trade balance and industrial production figures, also reflected weakness.
Could this be enough to put more downward pressure on the GBP/CAD pair?
Remember that directional biases and volatility in market prices are usually driven by fundamentals. If you haven’t done your homework on the GBP/CAD, it’s time to check out the economic calendar and stay up to date with the daily fundamental news!
The pair is already testing the 200 SMA dynamic turning point which coincides with the neckline support, so watch for any breakdown that may be followed by a decline of the same height as the chart pattern or 150 pips.
Stay tuned for potential bounces from support areas at S2 (1.7650) and then S3 (1.7600) as these also coincide with psychological levels.
However, the 100 SMA remains above the 200 SMA, suggesting that support is likely to hold rather than break, which could trigger another bounce to nearby resistance levels at the Pivot Point (1.7790) or even R1 (1.7870).
Don’t forget to practice proper risk management and stay aware of top-tier market triggers when trading this product. Good luck!