The Pound to Canadian Dollar exchange rate (GBP/CAD) sold off steeply after an inconclusive election result weighed on the Pound.

It fell 2.3% to lows of 1.7073 before recovering marginally to 1.7167 into the week’s close.

The decline looks to have gone some way in completing the c-wave of an a-b-c correction from the early May highs.

The sell-off could be finished and may simply be a correction before a resumption of the short-term trend higher.

To confirm a new downtrend we should first want to see a break below the 1.7073 lows, as this would reverse the sequence of higher highs and higher lows.

The volatile, post-election lows found a bottom at the level of an important trendline.

If this trendline were broken – confirmed by a move below 1.7050 - it would be a strong sign of trend change and lead to a probable follow-through lower to a target at robust support at 1.6830.

If trendlines are broken the exchange rate usually falls a similar distance to the move prior to the break, which in this case is the 2.3% election night plunge.

Data for the Canadian Dollar

Earnings were also up more than predicted, rising 1.0% in May, rather than the 0.5% forecast.

The strong homegrown data helped offset some of the recent damage from the declining price of oil – Canada’s main export.

In the week ahead there is little of major importance on the data front, although on Thursday June 15 we get manufacturing sales at 13.30 BST, which are expected to show a 0.8% rise in April.

Foreign securities purchases, meanwhile, are out on Friday at 13.30 and are an important component of the current account which last month stood at 15.13bn.

Data, Events to Watch for the Pound

We see the prospect of a stronger Pound should the election outcome point to a softer-Brexit.

"The UK election outcome raises a potential for an alternative to the hard Brexit which was what PM May was seemingly pushing for," says Viraj Patel at ING Bank N.V. "The loss of the Conservative seats has exposed vulnerability to the strategy PM May was pursuing and leaves her very vulnerable within her party. She now needs to accept a broader range of views within the party to secure a leadership."

In terms of hard Brexit, which GBP crosses seems to be pricing in, it would be difficult to push it through the UK Parliament given the fragile Conservative-DUP confidence-and-supply deal.

"Hence, we see more room for re-pricing," says Patel.

ING are now actually willing to bet on a rise in the value of the Pound and "prefer to go long GBP against USD given our constructive EUR/USD view."

But, keep one eye on data for surprises.

A busy week for the Pound kicks off with May inflation data at 09.30 BST on Tuesday, which is expected to show a slower 0.2% rise compared to the 0.5% rise in April.

Employment data is out at 9.30 on Wednesday, June 14, and although the unemployment rate is forecast to remain at a very low 4.6%, it is the average earnings statistic which will be the centre of attention given economists concerns about falling real earnings impacting on consumer spending.

The May retail sales release is out on Thursday Morning a 9.30, and is forecast to show a dramatic slow-down, and even a -0.8% contraction compared to the previous month rise of 2.3%.

The Bank of England (BOE) rate meeting is on Thursday at 12.00 but no change in policy or voting is expected, and arch-hawk Forbes will not be present.