GBP/CAD put in a strong day yesterday but it’s given it all back today and is threatening to break the May low of 1.8100.

GBPCAD daily with 200 dma

GBPCAD daily with 200 dma

The pair is below the 200-day moving average for the first time in more than a year.

If this is the start of a retracement phase, I see the minimum target at 1.7500. There isn’t really a catalyst for Canadian dollar strength but if US economic data continues to outperform, Canada is well-positioned to take advantage. Exports could begin to pickup on a weaker CAD and the BOC could shift to a hiking bias sooner than expected.