GBP/CAD X-Rate at Risk of Retest of 2017 Lows
Technical strategists at one of Canada’s leading financial services institutions is wary that Sterling will fall back to 1.60.
Concerns that a decline in GBP/CAD might unfold comes after days of sideways movement in the exchange rate with Sterling showing little by way in upside strength.
Shaun Osborne at Bank of Nova Scotia in Toronto says he sees GBP/CAD as being neutral at current levels.
On Friday, price action took a negative turn with the GBP trading higher, dipping lower and closing down on the session relative to Thursday—an outside day reversal.
“The fact that the signal comes with the GBP essentially trading sideways blunts the near-term impact of the signal but it is the second such development in the past two weeks and reaffirms near-term resistance in the mid 1.65 area,” says Osborne.
Scotiabank therefore continue to expect the GBP to soften back towards the mid 1.62 area following the reversal from the 1.6725 resistance point earlier this month.
“Our underlying concern remains that, following the break under the 2017 uptrend for the cross, the GBP is at risk of a retest of the 1.60 area. Bearish while 1.6725 caps,” says Osborne.
1.60 was last achieved back in January 2017 at a time when Sterling was under broad-based pressure.
It managed to rally from these levels and achieve a best near 1.78 but a resurgence in concerns over the UK’s future relationship with Europe and slowing economic data have triggered a notable retracement.
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