This sterling pair appears to be struggling to sustain its recent trend, and a chart pattern is forming to suggest a possible reversal.

GBP/CAD made a few failed attempts to bust through the 1.7850 minor psychological mark and is now testing the double top neckline support around 1.7700.

Will we see a break lower and downtrend soon?

GBP/CAD 4-hour Forex Chart by TradingView

A couple of misses in U.K. economic data releases this week look like dragging the pound lower, as traders stay up for one other likely Bank of England (BOE) rate of interest cut.

Specifically, the common earnings index fell wanting market estimates, suggesting weaker inflationary pressures, while the monthly GDP reading also turned out weaker than expected. Underlying data, including the products trade balance and industrial production figures, reflected weak spots.

Can these be enough to place further downside pressure on GBP/CAD?

Keep in mind that directional biases and volatility conditions in market price are typically driven by fundamentals. In case you haven’t yet done your homework on the British pound and Canadian dollar, then it’s time to envision out the economic calendar and stay updated on each day fundamental news!

The pair is already testing the 200 SMA dynamic inflection point that lines up with the neckline support, so keep an eye fixed out for a breakdown that might be followed by a drop that’s the identical height because the chart pattern or 150 pips.

Stay looking out for potential bounces off the support zones at S2 (1.7650) then S3 (1.7600) as these line up with psychological levels, too.

Nonetheless, the 100 SMA remains to be above the 200 SMA to hint that support is more prone to hold than to interrupt, possibly spurring one other bounce back to nearby resistance levels on the pivot point (1.7790) and even R1 (1.7870).

Don’t forget to practice proper risk management and stay aware of top-tier market catalysts when trading this one. Good luck!