By Gary Howes

It looked as though the Canadian dollar was due a relief rally against the British pound on Friday morning after a poor UK data release. However, Canada then outshone the UK after releasing a surprisingly bad employment figure.

In early afternoon trade we see the pound sterling to Canadian dollar exchange rate trading 0.72 pct higher at 1.8000.

(Please note all GBP/CAD quotes are taken from the spot markets; your bank will subtract a discretionary spread when passing on their retail rate. However, an independent FX provider will guarantee to undercut your bank's offer and deliver you up to 5% more currency. Please learn more here.)

Why was the British pound under pressure?

Follow the story of why the the pound sterling was in the dog-box on Friday morning. The UK currency saw profit-takers take money off the table after a strong start to 2014.

Signs that the UK economic revival could start to wane was enough of an excuse to prompt selling.

We await further data points before calling the end of the GBP rally.

Why was the Canadian dollar sold off on Friday?

The Canadian dollar (CAD) has witnessed heavy selling pressure today thanks to a disappointing employment data release.

It was revealed today that the Canadian unemployment rate rose to 7.2 per cent for the final month of the year, compared with 6.9 per cent in November.

Economists had expected the economy to add 14,600 jobs and the unemployment rate to hold steady at 6.9 per cent, according to estimates compiled by Thomson Reuters.

USD/CAD exchange rate heads higher

We keep an eye on the US dollar to Canadian dollar exchange rate as this headline pair will continue to dictate broader direction to GBP/CAD.

The Candian currency came under pressure even before the release of today's unemployment data:

"The CAD got battered by the contrasting Canada/US trade data earlier in the week (USDCAD rose 1.2% on the day) so the prospect of a combination of better-than-expected US data and worse-than-expected Canadian data, at least according to TD’s forecasts, suggests significant upside risks for funds today," says Shaun Osborne at TD Securities.

Osborne doesn't think this move up is complete yet and look for the above combination of outcomes to drive funds close to 1.10.

"In the event of the reverse—or at least in-line or better Canadian data, CAD shorts may feel a modest squeeze but weakness is unlikely to extend too far at present. We look for good support on any dip to the high 1.07/low 1.08 area today. As we noted earlier this week, the CAD sell-off seems justified on the basis of short-term spreads and fundamentals," says Osborne.