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    IronFX Intraday Comment |GBP/CAD | 18/11/2015

    • The dollar traded lower against most of its G10 peers during the European morning Wednesday, ahead of the FOMC October meeting minutes. The greenback was unchanged against JPY, NZD and AUD.

    • The British pound gained after comments from the Bank of England Deputy Governor on Monetary policy Ben Broadbent that the UK yield curves were currently very flat, leaving the timing of the first rate hike vulnerable to surprise economic events. He added that the markets appeared to push further back expectations of the first rate increase compared to economists. In addition, November yield curve pushed CPI forecast over 2% in 2016 compared to the Bank’s expectations of risks slightly to the downside in reaching their 2% inflation target in two years. The slightly hawkish tone of the BoE Deputy Governor strengthened GBP slightly against its peers. I would stay cautious on sterling’s further advances as these comments contradict with Gov. Carney’s stance at the Bank’s November Inflation Report and the downgraded assessment of medium-term growth and inflation prospects.

    • GBP/CAD has been trading in a consolidative manner since the 12th of November between the support zone of 2.0200 (S1) and the resistance territory of 2.0325 (R2). Therefore, I would consider the short-term bias to be neutral for now. The 2.0335 (R2) zone has been proven a reliable resistance in the past and as a result, I would prefer to see a clear move above it before I get confident on the upside. Such a break is likely to open the way for our next resistance territory of 2.0395 (R3). Our momentum studies lie below their respective downside resistance lines and are headed towards their equilibrium levels, supporting my choice to stay flat for now. On the daily chart, I see that on the 6th of November, the pair printed a higher low. However, we need a clear close above 2.0325 (R2) to have a forthcoming higher high. This is another reason I believe that it is better to wait for a move above 2.0325 (R2) before trusting further advances.

    • Support: 2.0200 (S1), 2.0135 (S2), 2.0100 (S3)

    • Resistance: 2.0285 (R1), 2.0325 (R2), 2.0395 (R3)

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