The charts are bearish for the Pound-to-Canadian Dollar rate in the short-term whilst the main data releases in the week ahead are Canadian jobs data and fresh UK sector-specific activity data for December.

The Pound-to-Canadian Dollar rate has recently broken out to the downside of a rising channel and looks set to continue lower.

It was forming a triangle, as we noted in our previous week ahead technical forecast, but instead of breaking out of the triangle higher in line with the short-term trend GBP/CAD broke out lower, and simultaneously also broke out of its rising channel.

A breakout from a triangle and a channel are both bearish indicators suggesting more downside is on the horizon.

The target for a break down from a triangle pattern is calculated by taking the height of the triangle at its widest point and extrapolating it from the breakout point down.

To calculate the target for a breakdown from a channel the width of the channel is extrapolated lower.

Both methods generate a similar result with a target at about 1.6480.

The current market rate is 1.7000 because the pair has rebounded in recent sessions, however, it is unlikely to maintain upside momentum and will probably resume going lower eventually, with confirmation coming from a break below the 1.6874 lows, towards an initial downside target at 1.6830 where the 200-day moving average is situated.

A clear break below the 200-day, confirmed by a move below 1.6750, would see the exchange rate probably descend to the next target of 1.6500, just above the 1.6480 target calculated above.

Large moving averages such as the 200-day can provide dynamic support where down- trending markets will stall, or even bounce.

Traders who are aware of this phenomenon often attempt to profit from the expected bounce by buying the currency at the moving average and this tends to magnify the effect.

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Data and Events for the Canadian Dollar

The main release for the Canadian Dollar in the week ahead is the Canadian employment report for December released on Friday, January 5 at 13.30 GMT, at the same time as the US NFP employment report.

Employment change shows the number of new jobs filled in the last month compared to the previous month, with extra 5k jobs expected in December.

The unemployment rate is also included and is forecast to rise to 6.0% by most analysts.

The data is important for the Canadian Dollar because it is an indicator of inflation pressures since the more people there are in work, the more they tend to spend and the more inflation tends to go up.

Higher inflation leads to higher interest rates, which increases inflows of foreign capital drawn by the promise of higher returns and this increases demand for the currency, driving up its value.

"We also get the December employment report in the first week of January and while we look for a modest pullback in net employment, further gains in wage growth should drive a hawkish response," says Canadian investment bank TD Securities.

Another important economic data release which is out at the same time as the employment data is the trade balance in November, which is the difference between imports and exports.

If the trade balance shows a surplus it tends to be positive for the currency because it reflects a rise in net demand and vice versa for a trade deficit in which imports outweigh exports.

Canada's trade balance is forecast to narrow slightly in November to -68.3bn from -68.8bn before.

Data and Events for the Pound

The main release in the coming week for the Pound will be key purchasing manager survey data assessing the health of the three main sectors of Manufacturing, Services, and Construction in December.

These releases are officially known as the PMI (Purchasing Manager Indices) and they are out at 9.30 GMT on Tuesday, December 2 for Manufacturing and Wednesday and Thursday at the same time for Construction and Services respectively.

Manufacturing is expected to have fallen from 58.2 to 58.0, Construction from 53.1 to 52.7 and Services to have remained unchanged at 53.8.