Yesterday we saw the British Pound getting boosted by the BoE vote change and GBP went up against the majority of its G10 counterparts. After the BoE announcement came out, GBP/CAD shot up by around 100 pips in a matter of 5 minutes. The pair continues to hold on to its upside support line drawn from the lows of the 31st of May and is currently trading above it. GBP/CAD is looking positive, but we should not forget that, looking at the bigger picture, the pair is still below its long-term upwards moving trendline taken from the low of 8th of September last year. This could mean that the up-move, which we are seeing right now, could be just a correction.
For now, until we see a break of the aforementioned support line, we will stick to the upside potential and aim for higher levels. A break through yesterday’s highs at around 1.7660 could trigger some more buying activity and GBP/CAD could make its way towards the 1.7755 zone. Slightly above that, there is another potential good area of resistance at around 1.7810 level, which could slowdown the rate from rising. Certainly, we could see a bit of retracement to the downside, towards the 1.7575 support line, from which the pair could bounce back up and aim for previously mentioned levels.
It also looks like that our oscillators, the RSI and the MACD, are also somewhat in favour of the upside. The RSI is above 50, a bit flat, but looks like it could move towards the 80 mark. The MACD is way above both its 0 and trigger lines, with the signs of potentially aiming higher.
Alternatively, if GBP/CAD starts dropping heavily and breaks the 1.7550 mark, then the pair could travel all the way towards the previously mentioned support line for a quick test. If GBP/CAD gets to that line, we will have to monitor that area carefully, as a potential break of it could place the bears into the driver’s seat and they could start pushing the pair down to the next key area of support at around the 1.7315 level.
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