GBPCAD is gaining bearish momentum after bouncing off its long-term descending channel resistance. Price has gapped down over the weekend on the deadlock in Brexit talks, and the pair is currently down to the mid-channel area of interest around the 1.6800 handle.

A break below this could lead to further losses until the channel bottom around the 78.6% extension or 1.6200 major psychological mark. However, price might still fill the gap over the weekend before resuming its drop. Stronger selling pressure could take it down to the full extension closer to the 1.6000 level.

The 100 SMA is above the longer-term 200 SMA on this time frame, suggesting that the path of least resistance is to the upside. In other words, support is more likely to hold than to break. Price might also find some bullish pressure around the 50% extension at 1.6573 or the 61.8% extension at 1.6427.

In addition, stochastic is indicating oversold conditions or that bears are tired. Turning back up could signal a return in bullish energy, enough to take the pair back up for a test of the channel resistance or a break higher. RSI is also reflecting oversold conditions and looks ready to move back higher.

The UK Tory conference is still ongoing and traders are keeping close tabs on remarks from top officials. So far, the mood has still been tense but there have been rumors that PM May is willing to compromise on the Irish border backstop with some suggestions.

With that, her closing speech on October 3 could determine their next steps in negotiations and how EU leaders might react. A deal could remove some uncertainty on UK businesses, although the PMI readings due throughout the week should provide an indication of how firms are adjusting.

Meanwhile, the USMCA or the replacement for the NAFTA has been strongly CAD bullish as it could allow the BOC to keep on with their tightening plans.