Ross Woodfield
Blackwell Global Investments Limited
The GBPCAD pair is a volatile one that broke out of a ranging pattern when the first poll showed the possibility of Scotland leaving the Union. The pair has pulled back and now finds the resistance at the old channel tough to break.
The movement in the GBPCAD pair has been mostly on the UK’s side of things. Scotland becoming independent will be detrimental for the GBP as the Bank of England has explicitly said Scotland cannot use the Pound Sterling. Scotland will be taking a vast amount of Oil and Gas tax revenue with it which will see London’s coffers take a sizeable hit. With the vote heating up, volatility is sure to stick with the pound through to the September 18 voting date.
Last weekend we saw a poll by YouGov which put the ‘Yes’ vote ahead by 51%-49%. This caused the pound to take an enormous hit and it touched a nine month low at 1.7534 against the Canadian dollar as a result. The latest pullback is because that lead has now swung back in favour of the ‘No’s by 52% to the 48% of ‘Yes’ votes. This has left the pound sitting just under some fairly solid resistance in the form of the bottom of the old channel that previously acted a support.
There is little news out for both Canada and the UK (not including any polls on the independence vote) so with any luck this pair will look to play off technicals. The Stochastic Oscillator is looking extremely overbought at the moment so the likelihood of a rejection off the resistance is high.
A bounce off the resistance at 1.7959 will look to find support at 1.7789, 1.7655 and 1.7534, any of which will likely act as possible exit points for a short trade. Should the price break back into the channel (if another poll shows the ‘No’ vote well ahead) then look for resistance to be found at 1.8079, 1.8221 and 1.8325.
The GBPCAD pair has seen a nice pullback to the channel which the price broke out of last week. This is acting as heavy resistance and the price could see a solid rejection off it.
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