GBP/CAD fake-out to the top side, reverts back into downtrend
|- GBP/CAD bears pushing back on the bull's efforts.
- Brexit and trade wars keep the pair volatile.
GBP/CAD has been in flux between Brexit headlines and the Canadian economy, or rather, expectations that the Bank of Canada is not going to b in a particular hurry to cut interest rates. We had bulls stepping in to test the bear's commitments only to find that, they indeed are committed to the dominant downtrend.
GBP/CAD rallied from the 1.6050s to test the 1.63s only to pushed back to a low of 1.6070. The conditions are technically sound for a continuation of a move to the downside but the geopolitical environment is crossing this rade to the point that it really can swing from one direction to the next at the drop of a trade war of Brexit headlines.
Price of oil in recovery supporting Loonie as well as BoC
The Loonie is linked to the price of oil which, of late, has corrected back to the upside. "With oil markets trading in sync with risk appetite, crude prices have staged a noteworthy recovery off the recent lows. In fact, with prices trending higher, the bar is razor thin for momentum indicators to reverse course and prompt CTAs to cover some of their recently added shorts in both WTI and Brent crude," analysts at TD Securities explained.
Should oil continue to advance, the Loonie would be expected to respond in kind When you add the recent Consumer Price Index and the likelihood that the BoC is on hold until 2020, then the bullish case for the CAD is even more compelling. However, and again, trade wars are unpredictable and so too are the timings of the headlines which could flip the BoC trade on its head in a swift pivot turn - The same goes for Brexit.
GBP/CAD levels
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