British Pound to Canadian Dollar Forecast for the New Week: Range Bound

December 11, 2016 - Written by John Cameron

STORY LINK British Pound to Canadian Dollar Forecast for the New Week: Range Bound

The Pound Canadian Dollar (GBP/CAD) exchange rate weakened to a four-week low this week with the Canadian dollar being boosted by rising oil prices.

Pound Canadian Dollar (GBP CAD) Outlook Hinges on Oil Prices

The Bank of Canada kept policy unchanged, amid expectations of continued uncertainty in the global economy and a moderate fourth quarter growth.

It also said that “a significant amount of economic slack remains in Canada, in contrast to the United States”, indicating that both the nation’s monetary policies are likely to remain divergent in the near future.

Buoyant oil prices are supporting the loonie with hopes that the OPEC decision to cut 1.2 million barrels of oil per day will eliminate the excess oil from the system.

Brexit will continue to influence the sterling

On the economic front, the economic data was mixed.

The UK industrial production numbers saw the biggest monthly decline since September 2012, however, the trade deficit data on Friday showed a surge in exports £2 billion, while imports decreased to £1.8 billion.

The sterling, however, continues to be ruled by the Brexit negotiation concerns. The lawmaker’s support to the British Prime Minister to trigger Article 50 by March 2017 was seen as bearish for the sterling.

How will the GBP/CAD trade next week?

The recovery in the GBP/CAD stalled at the downtrend line.

The pair can drop to the 1.63982 levels, where buying support should emerge.

Both the 20 and the 50 day moving averages are flat, which point to a range bound action. However, if the support of 1.63982 breaks, the pair will resume its downtrend.

Until the pair breaks down below the support or breaks out of the downtrend line, swing trading positions should be avoided.

Current Banking Exchange Rates

At the time of this update the CAD/GBP exchange rate was trending around 0.60568 and the GBP/CAD exchange rate was trending around 1.65103.

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