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It looks like GBP/CAD is in the process of breaking down a rising trend line pattern, which could see momentum pick up on upcoming oil and U.K. data ahead.

Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on NZD/JPY after the RBA minutes weighed on the comdolls, so be sure to check that out to see if there is still a potential play!

Equity Markets Bond Yields Commodities & Crypto
DAX: 12805.75 -0.38%
FTSE: 5909.08 +0.42%
S&P 500: 3450.75 +0.70%
NASDAQ: 11540.83 +0.54%
US 10-YR: 0.789% +0.027
Bund 10-YR: -0.599% +0.028
UK 10-YR: 0.189% +0.018
JPN 10-YR: +0.024% -0.002
Oil: 40.46 -0.91%
Gold: 1902.70 -0.47%
Bitcoin: 11921.75 +1.54%
Ethereum: 369.61 -2.60%

Fresh Market Headlines & Economic Data:

Dow gains more than 150 points as traders hope a stimulus deal can be reached before day’s end

Oil steadies but coronavirus and supply pressures remain

U.S. housing starts total 1.415 million in September, vs 1.457 million expected

German Producer prices were down -1.0% y/y in September

UK says no to more EU trade talks

BoE’s Vlieghe eyes more stimulus, open to negative rates

UK wants EU assurance that trade approach has changed, says PM’s spokesman

Upcoming Potential Catalysts on the Economic Calendar

Fed Evans speech at 5:00 pm GMT
API Crude oil inventory change at 8:30 pm GMT
Australia Leading Index at 12:30 am GMT (Oct. 21)
Bank of Japan Sakurai speech at 1:30 am GMT (Oct. 21)
U.K. Inflation at 6:00 am GMT (Oct. 21)

What to Watch: GBP/CAD

GBP/CAD 1-Hour Forex Chart
GBP/CAD 1-Hour Forex Chart

On the one-hour chart above of GBP/CAD, we can see that the pair has pretty much gone sideways over the last few weeks as the bulls have had trouble breaking above the area around 1.7150.

We can also see a rising ‘lows’ pattern, that is currently being tested and potentially could break within the next session or two.

That catalyst for that breakout (or fakeout) could come from the upcoming API crude oil inventory change data (potentially an influence on the Canadian dollar), while the upcoming inflation data from the U.K. could be a very big influence on the British pound if it comes in way outside of expectations.

If you expect weaker U.K. inflation data and oil inventories to hold or decline, then watch out for a break below the rising ‘lows’ pattern.

And with a daily ATR of 135 pips, this scenario could push GBP/CAD to the October lows around 1.6900, especially if we see Brexit uncertainty rise during the session and/or rising positive global risk sentiment.

For you GBP/CAD bulls out there, wait for a combination of increasing oil inventory data and better-than-expected U.K. inflation data before considering a long position.

Bullish reversal candles at the rising trendline is a technical pattern to watch out for as well that could draw in more buyers if the above fundamental scenario plays out.