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Is GBP/CAD Ready to Rally?
Both the pound and the loonie have made their turns rallying strongly over the past few days, but while one may continue to rally, the other could be facing the end of its run. Cable remained strong today boosted by generally hawkish rhetoric from BoE Chief Mark Carney who acknowledged that wage pressures are rising. It appears to be only a matter of time before UK central bank decided to tighten monetary policy.
Meanwhile on the other side of the Atlantic the loonie has also performed well as oil prices have jumped over the 50/bbl level. But the rise in oil prices looks to be nothing more than a short covering rally as global demand remains muted. Meanwhile data out of Canada has been soft and if tomorrow’s employment numbers miss their mark the loonie is likely to unwind much of its recent gains as markets begin to speculate about further easing from BOC.
All of this leads us to believe that the rally in GBP/CAD may just be starting. The pair has support at 1.9800 and could move all the way towards 2.0200 before encountering any serious resistance