The Pound-to-Canadian Dollar has been trading in a sideways range for over a week but now looks increasingly like it might break out higher.

A move above the 1.6796 highs could confirm a continuation higher to the next target at 1.6900 at the level of a long-term downtrend line.

This major trendline is expected to act as an obstacle to further upside and could be the locus for a pull-back, consolidation or potentially even a reversal.

One proviso to the bullish forecast is that the MACD momentum indicator is looking increasingly bearish as it rolls over and starts to descend, and this doesn't support the likelihood of more gains.

Nevertheless, the uptrend is still intact and, therefore, likely to extend.

"GBPCAD seems to have lost its sense of direction," says Scotiabank's FX Strategist, Shaun Osborne.

"After an extended run higher, this can be bad news for the market," he adds.

He remains bullish overall, however, saying, "We think minor GBP dips remain a buy and continue to look for the GBP rebound to extend through to the 1.70/1.75 range in the next few weeks."

New and Events for the Canadian Dollar

Key data in the coming week for the Canadian Dollar, or Loonie, will be Canadian payrolls, which is out at the same time as Non-Farm Payrolls on Friday, October 6 (13.30 BST).

Current expectations are for the Unemployment rate to rise to 6.3% from 6.2% previously, and for employment to increase by 15k.

The Trade Balance is out on Thursday at 13.30 and is forecast to narrow to -2.65bn in August from -3.04bn previously.

The Canadian Dollar had been one of the strongest G10 currencies as investors bought the currency expected the Bank of Canada (BOC) to aggressively continue increasing interest rates, that is until governor Poloz poured cold water on those expectations during a speech last week, when he said the Bank won't be 'mechanical' on raising rates, "because inflation and wage growth is slower than they anticipated," according to BK Asset Management's, Managing Director, Kathy Lien.

News and Data for the Pound

The main releases for the Pound in the week ahead will be September Purchasing Manager Survey data which will give us insights into the health of the manufacturing, constructing and service sectors for the month of September.

"Next week’s PMI reports will be exceptionally important. If manufacturing, service and construction activity accelerates, it would validate the BoE’s calls for tightening and reinvigorate the rise in Pound Sterling. However, if manufacturing- and/or service-sector activity slows, it would cast doubt on the central bank’s plans and cause the currency to give up some of the gains that it enjoyed in

September against the dollar and the euro," says Kathy Lien.

The first release is Manufacturing PMI on Monday at 9.30 BST, which is forecast to show a slowdown to 56.4 from 56.9 in the previous month of August.

Construction PMI is out at the same time on Tuesday and is forecast to show a slowdown to 50.8 from 51.1.

Finally, Services PMI is out at 9.30 on Wednesday and is forecast to remain unchanged at 53.2.

Politics will also be in focus with the Conservative party conference taking place in the first-half of the week.

However, it will be Prime Minister Theresa May's speech on Wednesday that has the most market-moving potential as she is expected to touch on the issue of Brexit.

May's speech on the issue of Brexit delivered in Florence on September 22 was widely credited with giving Brexit negotiations a fresh impetus with the outcome of the fourth round of negotiations showing fresh progress.

However, there is still much progress to be done and markets will be interesting if May is willing to deliver further clarity.

Furthermore, there are concerns May's position is in jeopardy with persistent talk of senior figures within the Conservative party willing to challenge her for the leadership of the party.

It goes without saying that any successful challenge opens up the door to fresh uncertainty. If a new Prime Minister were to be installed over coming weeks or months the pressure for another general election mounts.

If there is one thing the Pound detests, it is uncertainty.