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    IronFX Essential Intraday Comment | 04/08/2015 GBP/CAD

    • The dollar traded lower against almost all of its G10 counterparts during the European morning Tuesday, ranging from -0.23% against NOK, to -1.30% vs AUD. The greenback was virtually unchanged against GBP and JPY.

    • UK’s construction PMI declined to 57.1 in July from 58.1 previously, missing expectations of a rise to 58.5. GBP only dipped briefly on the news and quickly bounced back up to trade at the same level as before. The unexpected decline in the construction PMI following the improved manufacturing PMI on Monday apparently didn’t raise concerns among investors, who have already shifted their focus to Thursday. The service-sector PMI, to be released on Wednesday, will shed further light on the strength of the country’s growth in Q2, but the most important day remains Thursday, when the BoE will release its rate decision, the minutes and the Inflation Report, all at the same time. We should keep in mind that the BoE officials have had quite an optimistic tone in their recent speeches, thus new upbeat economic forecasts and a split in the votes are likely to prove GBP-bullish.

    GBP/CAD traded lower during the European morning Tuesday following the disappointment in the UK construction PMI. The short-term trend on the 4-hour chart is still to the upside in my view, but further correction could be on the cards, perhaps for a test at the 2.0330 (S1) zone. The RSI slid after exiting its above-70 zone, while the MACD has topped and looks ready to move below its trigger line soon. These momentum signs corroborate my view that a setback is possible in the short run. A break above 2.0585 (R1) is needed to confirm a forthcoming higher high and signal the continuation of the uptrend. Something like that could pave the way for the next resistance hurdle of 2.0680 (R2). On the daily chart, GBP/CAD is printing higher peaks and higher troughs above the uptrend line drawn from the low of the 5th of May. Therefore, I would consider the longer-term trend to be positive as well.

    • Support: 2.0330 (S1), 2.0120 (S2), 2.0000 (S3)

    • Resistance: 2.0585 (R1), 2.0680 (R2), 2.0860 (R3)

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