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    IronFX Intraday Comment | GBP/CAD | 04/11/2015

    • The dollar traded unchanged against most of its G10 counterparts during the European morning Wednesday, ahead of the US ADP employment report for October. The greenback was higher against EUR, JPY and AUD, in that order, while it was virtually unchanged against GBP, NZD, CHF, CAD, SEK and NOK.

    • The UK service-sector growth picked up in October, adding to signs that the economy has started to recover in Q4 after slowing in Q3. The service-sector PMI rose to 54.9 from 53.5 in the previous month, above the forecast of 54.5. Even though the pace of growth in the sector remains subdued, according to the Markit report, this was the first time since May that the figure showed signs of improvement. The services figure, followed the strong prints from the manufacturing and construction PMIs, give evidence of a solid growth in the final quarter of the year. With just a day ahead of the Bank of England meeting and the quarterly inflation report, the robust data could encourage officials to keep unchanged, or at least to not revise down much, their near-term GDP growth and CPI forecasts. In this event, GBP could remain well supported.

    • GBP/CAD traded higher during the European morning Wednesday following the more-than-expected increase in the UK service-sector PMI for October. Although the rate may trade higher for a while, perhaps to retest the 2.0230 (R1) resistance line, I would consider the short-term picture to be neutral. The pair has been oscillating between 2.0100 (S1) and 2.0325 (R2) since the 21st of October. Taking a look at our short-term oscillators I believe that the positive wave is likely to remain short-lived and that the bears will eventually take control again. The RSI hit its 50 line and turned down, while the MACD stands below both its zero and signal lines. What is more, there is negative divergence between both these indicators and the price action. On the daily chart, I see that the price structure has been lower peaks and lower troughs since the 25th of August. This keeps the medium-term path negative and it is another reason I believe that the pair will eventually turn down.

    • Support: 2.0100 (S1), 2.0000 (S2), 1.9900 (S3)

    • Resistance: 2.0230 (R1), 2.0350 (R2), 2.0400 (R3)

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