The British pound has been struggling against the Canadian dollar, dropping from its 2024 highs to a multi-month support zone.

Currently, though, GBP/CAD has calmed down from its steep declines. Could this signal a longer-term bounce?

We’re taking a more in-depth have a look at the 4-hour chart for clues:

GBP/CAD 4-hour Forex Chart by TradingView

Sterling has been under pressure since late December, weighed down by concerns over the U.K.’s fiscal conditions and the Bank of England’s dovish pivot.

On the flip side, the Canadian dollar is riding high, supported by a bounce in crude oil prices and start-of-year optimism. It’s even outperforming other “risk” assets just like the pound and other commodity-linked currencies!

Do not forget that directional biases and volatility conditions in market price are typically driven by fundamentals. In the event you haven’t yet done your homework on the British pound and the Canadian dollar, then it’s time to envision out the economic calendar and stay updated on each day fundamental news!

GBP/CAD, which tumbled from its 2024 highs near 1.8225, has found its footing across the 1.7450 zone.

What makes the world interesting is that it’s near the S1 (1.7454) Pivot Point line AND a support area that hasn’t been broken since mid-2024.

If we see more green candlesticks here, buying pressure could construct, keeping GBP/CAD inside its months-long range.

Potential targets include the Pivot Point at 1.7727 or the mid-range level near 1.7800 if bullish momentum holds.

But when the bears return and GBP/CAD breaks below 1.7450, the pair could drop to multi-month lows.

In a downside breakout, look ahead to previous support zones around 1.7400 or 1.7280 to come back into play.

Whichever bias you find yourself trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that might influence overall market sentiment!