It must be a giant week for GBP/CAD merchants as we’ll get the newest financial coverage resolution from the Financial institution of England, and the newest employment information from Canada.
Will these occasions result in large volatility, and one other alternative for sellers to play the descending channel sample on GBP/CAD?
GBP/CAD: Day by day
We’ve bought a strong technical swing setup within the works on GBP/CAD this week, a pair that’s more likely to see a choose up in motion with high tier occasions forward.
For the British pound, we’ve bought the latest monetary policy statement from the Bank of England a few days away, with expectations that they may hike charges from 0.25% to 0.50% and maintain off on any adjustments to their bond shopping for program.
And from Canada, we’ve bought the month-to-month employment report on Friday, with expectations that the December quantity goes to interrupt from the lengthy string of robust jobs information in 2021.
If these eventualities play out, it’s attainable that we see GBP/CAD bounce greater this week, taking the market to the highest of a descending channel on the each day timeframe, as seen within the chart above.
This is able to additionally take the market to a really robust space of curiosity that’s been each support and resistance (round 1.7200 – 1.7300) , particularly the latter the final time GBP/CAD was there.
We expect one other retest of that potential resistance space would extra probably attract longer-term sellers than consumers, because the Loonie continues to have a possible charge hike narrative supporting it, in addition to the continued rise of oil costs (WTI crude is up over 40% within the final month and oil is Canada’s number one export product).
Except we get a serious shock from both occasions (e.g., a extra hawkish-than-expected BOE assertion, a a lot worse-than-expected Canadian jobs report), we’ll be on the look out for bearish reversal patterns round 1.7200 – 1.7300 earlier than contemplating a brief place.
That situation may presumably flip into one other bearish run in GBP/CAD, with a strong potential return-on-risk if utilizing an upside channel break as a cease information, and focusing on the subsequent potential help space (probably the underside of the channel and the 1.6500 main psychological deal with).
However what do y’all suppose? Will GBP/CAD bounce greater this week to offer the bears one other likelihood to quick at higher costs? Please tell us in our remark part beneath!
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