GBP/CAD continues to move up and down in a sideways range after an initial bullish rally from off of the mid-January lows.

The exchange rate appears to have formed a bull flag chart pattern.

Whilst a break above the 1.6627 highs might suffice to confirm a move higher, a clearance of the R1 monthly pivot at 1.6679 first, signalled by a break above 1.6800, would provide a more reliable signal of continuation.

Such a rally would probably trigger a move to an upside target at 1.7100.

Both the monthly and weekly charts also look bullish, with the former showing, “two bullish hammer-like reversal candles which look like they are forming an important bottom,” and the latter showing the formation of a bullish double-bottom chart pattern.

Data for the Canadian Dollar

Manufacturing Sales, on Wednesday, February 15 at 13.30 GMT, is expected to show a 1.4% rise in December versus a 1.5% rise previously.

On Friday, February 17 Foreign Securities Purchases is released, showing the amount of securities purchased by Canadian investors in December.

Data, Events this week for the Pound

The Bank of England will only raise interest rates should inflation be seen to be rising faster than they expected, and if markets see the prospect of higher interest rates on the horizon they will start bidding the Pound higher.

However, a rise in inflation is forecast due to the impact of the weaker Pound which has increased the cost of imports.

However, inflation is rising across the world at present as oil prices recover from record lows.

Therefore the Bank of England will look through any rise in inflation should they be due to these factors.

That is why markets will be watching instead is the core inflation rate - that element of the inflation picture that is due to economic growth, and wage rises in particular.

Therefore, what markets will instead be looking at is the core headline figure which is forecast to rise by 1.8% year-on-year in January, up from 1.6% in December.

Should the core level rise faster than expected then markets might take a bet that the Bank will be looking to raise interest rates sooner than they indicated in their February Inflation Report.

We heard last week that outgoing MPC member Kristin Forbes believes that an interest rate is actually warranted owing to the resillience of the UK economy.

If inflation beats expectations then perhaps other members of the MPC will share Forbes' view.

With wage data being so important then, expect market focus to turn to jobs and earnings data due out on Wednesday.

Average earnings will be in focus with 2.8% growth in wages being forecast. If this beats expectation then Sterling could be bid higher.

Watch for the unemployment rate to stay unchanged at 4.8%.

The Bank of England believes the economy's full employment threshold lies at 4.5%, the sooner this level is reached the sooner rates will likely rise.