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The Pound to Canadian Dollar pair (GBP/CAD) is at a key technical moment.
GBP/CAD is relatively unchanged on last week's levels at 1.8664 at the time of writing Tuesday, and most observers paying a cursitory glance to the exchange rate will see relative stability.
But those paying closer attention will see a mighty battle is underway as the current level is at the top of a broader range; resolution will determine whether we fall back into the range or reach for new multi-year highs.
Momentum is currently with the Pound, which resides above the 200-day exponential moving averages, as well as other trend indicators for shorter-term timeframes.
The setup is broadly supportive and ultimately the charts speak of new highs over the coming months.
And yet, GBP/CAD has already effectively failed at the top of the March-August range, which is where we now are, on three occasions this year: it could yet be too soon to call it fourth time lucky for Sterling bulls.
Above: GBP/CAD at daily intervals showing the supportive longer-term 200-day EMA. The technical battle now rages at the range highs where selling interest has traditionally overcome buyers.
If so, then a retreat back to 1.85, the middle of the range, becomes likely. This would allow the GBP/CAD to reconnect with the 200-day exponential moving average and reload for a fresh attempt higher.
The Pound isn't exactly the most attractive currency at the minute, provided weak economic fundamentals and the prospect of a major tax hikes in November.
But the problem for the Canadian Dollar is that it is tied to the U.S. Dollar, meaning GBP/CAD is closely aligned with GBP/USD.
Above: GBP/USD (top) provides a lead for GBP/CAD
And GBP/USD is a function of USD, meaning the Dollar is dictating proceedings.
The Dollar has enjoyed a period of consolidation following a notable selloff in the first half of this year, but numerous currency analysts we follow think that further losses are to come.
The ongoing erosion of U.S. exceptionalism, elevated technology stock valuations and the steady assault on U.S. institutions by the Trump White House give reason to expect further USD weakness.
For GBP/CAD, that opens the door to new highs in the coming months and years.