- GBP/CAD has found support at the 200-day MA, and is bouncing

- The main release for Sterling is Manufacturing PMI data on Friday

- The Canadian Dollar, meanwhile, could see volatility after the Bank of Canada rate meeting

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One Pound buys 1.7281 as we enter the new trading week.

The pair has declined somewhat since the preceding week when it made a new low of 1.7117 just under the level of the 200-day MA

It has since recovered for three days running as increasing concerns about the outlook for trade with the USA overshadow overall positive economic data.

Despite the rebound GBP/CAD remains technically in a downtrend.

The 200-day MA is a formidable obstacle to further selling, but a break below the 1.7100 level would confirm the MA had been breached and more downside to the next target at 1.7000.

Alternatively, a break above the 1.7225 level would probably indicate the birth of a new uptrend, with an initial upside target at 1.7300.

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CAD - What to Watch

Whilst there is an outside chance the BOC will raise rates this week most analysts do not believe they will.

"The question now is whether the Bank will go this week or in July. We favour the latter date given the current uncertainty related to US trade policy (steel/aluminum tariff exemptions expire on June 1, and the new threat of auto sector tariffs), and the need for more data to confirm that the housing market is adjusting," says Bipan Rai, North American FX Analyst for CIBC capital markets.

Canadian Investment Bank TD Securities, meanwhile, think there is even less of a chance of a hike:

"We look for the Bank to leave policy unchanged and expect few surprises, with only the statement to guide markets and no significant developments since April. We look for a mixed set of hawkish and dovish tweaks, but on balance expect markets to take a dovish cue from the continued emphasis on "gradual" and "cautious.""

The other main release for the Canadian Dollar is GDP growth rate data for the first quarter, which is expected to show a 1.8% in Q1 on an annualized basis, and 0.2% in March compared to February, when it is released on Thursday, May 31 at 13.30.

GBP - What to Watch

The manufacturing PMI is an index score generated from survey responses of key business managers in the sector. It is a fairly reliable leading indicator of growth. A higher-than-expected result would probably push the Pound higher versus the Euro, especially if the final Eurozone Manufacturing PMI result, which is out only a half an hour earlier, continues to show a contrasting move down.

The busiest day is probably Thursday, May 31, when the Nationwide House Price Index (HPI) is scheduled for release at 7.00, followed by third-tier releases at 8.30 covering credit and lending, such as Net Lending to Individuals, Consumer Credit and Mortgage Approvals; and also M4 Money Supply (all for April).

Another significant release in the week ahead is Consumer Confidence, which is out at 23.01 on Wednesday. Experts are forecasting a slight recovery in to -8 from -9 previously. The release is often a good barometer of future trends in the economy given the disproportionate importance of consumers in the UK economy.

The British Retail Consortium's (BRC's) Shop Price Index, meanwhile is out at 23.01 on Tuesday evening.

Apart from hard data, there may be a lot of focus on Brexit as the EU summit in June to decide the next stages of the process gets nearer.

"Through the remaining four days Brexit may see a renewed focus ahead of the 28-29 June EU Leaders’ Summit. There have been some reports that talks with Brussels will begin again on Tuesday. Meanwhile, the Tory party has been put on notice for an early June return of the EU Withdrawal Bill to the House of Commons after its spell in the Lords," says Victoria Clarke, an analyst at Investec.

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