GBPCAD previously broke a head and shoulders pattern, signifying that a downtrend is underway. Price has pulled back to the broken neckline support, which lines up with a Fibonacci retracement level that’s still hold as resistance for now.
A short-term consolidation pattern has formed, indicating that traders are still unsure where to take this pair next. A break below the near-term support at the 2.0100 major psychological mark could indicate that the impulse wave is resuming.
On the other hand, an upside break past the resistance at 2.0300 could show that pound bulls are gaining traction and ready to take price higher. This would be a break past the Fib levels, which means that the rally isn’t just a correction but the start of a reversal.
GBPCAD Fundamental Factors
Event risks for this trade include the UK Super Thursday events, which are the BOE statement, MPC minutes, and Inflation Report. Any downgrades in estimates or shifts to a more downbeat bias could spur a downside break and further losses until the previous lows at 1.9750.
On the other hand, reiterating their hawkish bias and preference for tightening next year could keep the pound strong ahead of Canada’s jobs release on Friday. Analysts are expecting to see a stronger pace of jobs growth but underlying figures could still reflect weak spots.
Earlier this week, the UK reported a stronger than expected manufacturing PMI reading that indicated a faster pace of expansion. For today, the construction PMI is due and a slight dip in activity is expected. Traders might wait for the services PMI release before establishing their pound biases, as this sector contributes a larger share to overall growth.
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