GBP/CAD: Price Breaks Support, Eyes 1.6600 Area as Next Target

Yesterday, the GBP/CAD experienced a notable decline, reaching a daily low of 1.6725 as the week drew to a close. This downward movement was primarily driven by robust labor market data from the United States, which hinted at the possibility of the Federal Reserve (Fed) reevaluating its stance on further interest rate hikes. Meanwhile, the British Pound continued to face selling pressure, despite the absence of any significant economic events on the British calendar.

The GBP/CAD currency pair is currently following a bearish trajectory within a bearish channel. The drop observed yesterday resulted in a break of the dynamic trendline, which had previously acted as a support and allowed the price to rise consistently over time. This breakdown suggests a shift towards a bearish outlook.

Furthermore, the price action is forming an AB=CD pattern, indicating a potential continuation of the downward trend. The maximum extension point of the D leg aligns with the 1.618% Fibonacci level, serving as the next target for the price around the 1.6600 area, where a support level is present. Consequently, we anticipate further short-term downward movement within the bearish channel.

In summary, the GBP/CAD experienced a decline yesterday, reaching a daily low of 1.6725. This was influenced by strong labor market data from the US, potentially prompting the Fed to reconsider rate hikes. The British Pound faced selling pressure, despite the absence of notable economic events. The currency pair is currently following a bearish channel, with the recent breakdown of the dynamic trendline suggesting a bearish outlook. The price action indicates the formation of an AB=CD pattern, with the next target located around the 1.6600 area, where a support level exists. As a result, we expect a continuation of the short-term bearish movement within the channel.

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