GBPCAD is trending lower, forming lower highs and lower lows connected by a falling channel. Price is testing the channel bottom and could be due for a correction to nearby resistance levels.

The Fibonacci retracement tool shows where more sellers might be waiting to hop in. The 61.8% level is in line with the top of the channel near the 1.6650 minor psychological mark, which would be the line in the sand for a trend pullback.

A shallow retracement could already find sellers at the 38.2% Fib that lines up with the mid-channel area of interest at 1.6588 or the 50% level just slightly above the 1.6600 handle. These retracement levels are also in line with the dynamic resistance at the moving averages.

Stochastic is still pointing up to show that buyers have the upper hand, and the oscillator has room to climb before reaching the overbought zone. This suggests that the correction could keep going until buyers are exhausted. A bullish divergence can also be seen, as stochastic made higher lows while price had lower lows.

RSI is also on the move up, so price could follow suit while bullish pressure is in play.

The UK reported stronger than expected CPI readings, likely prompting the BOE to hike interest rates once again. Still, fears of stagflation continue to weigh on the UK economic outlook, casting doubts that the central bank’s tightening moves might be of much help.

Meanwhile, the Loonie is drawing strong support from elevated crude oil prices, as the prospect of the EU imposing an embargo on Russian oil has boosted the commodity earlier on.

However, the region’s leaders failed to reach an agreement on cutting off access to Russian oil, leading the commodity to erase some of its recent gains. The correlated Canadian dollar might soon follow suit.