The Pound to Canadian Dollar exchange rate (GBP/CAD) remains well supported on a technical basis, according to a new analysis from a leading Canadian bank.

Scotiabank says the GBP/CAD exchange rate has softened in line with predictions made three weeks ago and that "the cross has just bumped along support."

This support is defined by the 40-day Moving Average (1.7001 today), with price action betraying an absence of stronger, short-term directional momentum.

"Developing trend support off the October low has come under pressure over the past week and is converging with the 40-day MA signal. The 1.6980/00 area warrants attention as a potential base for the GBP in the near-term, given still bullish residual momentum on the longer run charts," says Shaun Osborne, Chief FX Strategist at Scotiabank.

Osborne said the Pound-Canadian Dollar outlook risks turning more bearish on a daily close below the 1.6980/00 zone of support.

The Pound rallied 0.56% following Tuesday's strong wage data but has since returned most of these gains in the wake of softer-than-expected inflation numbers that keep alive the prospects of an interest rate cut at the Bank of England in the first half of this year.

Market-implied expectations for a cut in June rose to 75%, having been below 50% ahead of the news inflation was unchanged at 4.0% year-on-year in January, undershooting the 4.2% consensus expectation.

Bank of England Governor Andrew Bailey welcomed news that inflation didn't accelerate as was expected but warned these figures do not alter the Bank's view that interest rates would need to be held at current levels for some time.

So, while the Pound has come under pressure, for now, these moves look to be a correction of the recent strength as the Bank of England is unlikely to rush into a rate cut.