The Pound to Canadian Dollar exchange rate (GBP/CAD) is expected to weaken in the short-term after the pair started moving lower at the end of last week.

The pair dropped following a general all round strengthening in commodity prices and global sentiment, since it relies heavily on its exports of hard commodities.

GBP/CAD formed a bearish ‘outside day’ on Friday which is when the entire range from the high to the low encompasses the whole of the previous day’s range.

This happened after the exchange rate rose to a high of 1.6720 before rolling over steeply and ending the day at the 1.6487 lows.

Outside day price patterns, are supposed to signal reversals of the trend, which suggests the possibility of a reversal of the mini-up-trend and a resumption of the longer-term bearish down-trend.

Scotiabank’s FX Strategist, Shaun Osborne, expects the pair to immediately move lower from here towards an initial target at the 1.6200 lows.

A break below 1.6400 would be useful to provide bearish confirmation, and a further break below the 1.6200 lows would conform a move down to 1.6100.

“The GBP rebound from the 1.6240 area looks complete at this stage and we look for additional losses to retest the low 1.62s at least from here. Our underlying concern in recent weeks has been that, following the break under the 2017 up-trend for the cross, the GBP was perhaps at risk of a retest of the 1.60 area. Bearish,” concludes Osborne.

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Data for the Canadian Dollar

Housing data comes front and centre this week – and given what one wise old wag once said, that “Housing leads the economy,” its worth keeping an eye on.

Housing Starts for July, are out at 13.15 on Wednesday, August 9, and are expected to show a drop from 213k to 205k.

Building Permits, meanwhile, out at 13.30 on Wednesday are forecast to fall by -1.8% in June from a 8.9% rise previously.

The New Housing Price Index is out at 13.30 on Thursday, and forecast to rise 0.5%.

Overall the outlook remains posiitve for housing in Canada so its unlikely that the data will weigh too heavily on the currency.

Data for the Pound Dominated by Manufacturing and Industrial Production Figures

A rather thin week for UK data kicks off on Monday morning with Halifax House prices at 8.30 BST and the consensus estimate arguing for a 2.0% rise year-on-year and a 0.2% rise month-on-month.

Given House Prices fell a hefty -1.0% in June, analysts will be checking whether that was just a blip on the cardiogram rather than a deeper decline as a consequence of the economic slowdown.

Then at 00.01 on Tuesday, the BST, British Retail Consortium’s Retail Sales monitor will be released.

This is a sentiment survey asking people in the Retail sector how things are going.

Analysts may being paying more attention to it given the rising rate of inflation and the squeeze in real earnings this has created.

On Thursday, August 10, the RICS House Price balance is to be released, with a probable 8.0% rise expected.

The most important event for Sterling this week comes at 9.30 on Thursday we have Industrial and Manufacturing Production for June.

Previous monthly readings have confirmed the sector to be in contraction, and it appears market expectations aren't any more constructive for when it comes to the June data.

Manufacturing production is forecast to read at 0%, up from the previous month's -0.2%.

Industrial production is forecast to read at 0.1%, an improvement on the previous month's -0.1%.

With expectations regarding Sterling and the UK economy in a downbeat mode, positive surprises on the data front could provide some welcome upside for the currency.

The Trade balance for June is out at the same time, and is expected to show the deficit narrowing to 11.00bn from 11.86bn previously.