GBP/CAD – Where’s Good Place to Sell?

GBP/CAD – Where’s Good Place to Sell?

GBP/CAD – Where’s Good Place to Sell?

Fundamentally, we believe that the recent decline in GBP/CAD marks a top for the pair. Sterling faces a host of problems in the short and medium term while CAD, which has been hit hard by lower oil prices is nearing a bottom. This morning we learned from the Confederation of British Industry in the U.K. that manufacturing orders fell sharply in the month of January. While this is not a widely followed release, it shouldn’t be ignored as it has a strong correlation with the broader PMI manufacturing report. Export orders fell at a sharp pace in January, which does not bode well for U.K. growth. GDP is the only piece of market moving U.K. data on this week’s calendar and recent reports such as retail sales and trade point to a slowdown in growth. At the same time, last week’s Canadian economic reports were good with retail sales in Canada rising 1.7%. Oil is obviously a problem but $25 should mark a bottom for crude.

So that leaves the question of where is a good place to sell GBP/CAD and that’s where technicals come into play. The currency pair is attempting to break above the 100-day SMA and while that is important, the main resistance is level is 2.04. So the first opportunity to sell would be near 2.04 with a stop above 2.06. The more conservative option would be to sell closer to 2.06 with a stop above 2.08 for a move back to 2.000.

*This is NOT an official Big Trade recommendation but rather an interesting opportunity to watch.

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