GBPCAD could be in for another strong rally as price is forming a double bottom on its 4-hour time frame. Price has yet to test and break the neckline resistance around 1.7200 before confirming that a long-term uptrend is in the works.

The 100 SMA is above the longer-term 200 SMA to indicate that the path of least resistance is to the upside or that the uptrend is likely to gain traction. However, the gap between the moving averages has narrowed to reflect slowing bullish momentum and signal a possible bearish crossover.

Stochastic is already indicating overbought conditions or that buyers are feeling exhausted. The oscillator has yet to turn lower to signal a return in selling pressure and a possible dip in GBPCAD. RSI is also in the overbought area to indicate that buyers might book profits and let sellers take over.

Positive Brexit developments have been mostly responsible for lifting the pound in the past week, with indications that the EU is preparing a super-charged free trade deal for the UK. Barner also noted that they are “very close” to a Brexit deal, which would lift a lot of uncertainty for UK businesses.

The UK monthly GDP report for August is up for release this week and its components should give more clues on how sectors are adjusting to Brexit jitters. There have been some disappointing numbers in the services sector but manufacturing appears to have stayed resilient.

On the flip side, the Loonie is shedding ground on weaker BOC rate hike expectations owing to weaker than expected Canadian jobs data. Crude oil could also take hits as the OPEC and Russia are said to be considering boosting output to keep a lid on price gains, thereby erasing some of the correlated Loonie’s gains as well.