GBP/CAD – Could We See A Potential Drop?

If we look at the 4-hour price chart of GBPCAD, we can see that the price has been ranging within an upward price channel since mid-December 2018. Looking closer at the current price on the chart above, we can see that Friday’s session showed a steep rise, the Great British Pound gaining 1.30% against the Canadian Dollar. This movement towards a potential retest of resistance on the price channel, however for the moment price seems to have found strong secondary resistance at price level 1.7735. Amidst Brexit chaos, news released over the weekend state speculation that ministers of Theresa May’s cabinet are in open revolt against her and want an interim leader to complete the Brexit process. Therefore, sentiment around the Great British Pound is likely to be bearish into the start of the trading week, and we can expect the GBP to fall against a basket of other currencies.

Looking closer at the current price on the 4-hour chart of GBPCAD we can see that the opening price had gapped to the upside, which was quickly followed by traders selling the pair, keeping the price under the resistance level 1.7735.  We can see that this quick selling movement has caused Chikou Span to retreat potentially back into price suggesting we are likely to see some ranging price action. Tenkan Sen & Kijun Sen have merged and are levelling off, so we are unlikely to see any bold directional movement, especially not on low opening volumes. GBP this week is very likely to be fundamentally driven around Brexit and decisions made by Theresa May and the UK Parliament.