GBP/CAD Bulls Charging Ahead Above Previous Highs

Market Overview

Sterling and the loonie are in the spotlight this week, each facing pivotal events that could stir up short-term volatility. Over in the UK, Chancellor Rachel Reeves is set to deliver the Autumn Budget. The market’s buzzing with expectations of inflation-taming measures—think tax hikes and spending cuts—that might put a damper on consumer confidence and slow down economic growth. The Bank of England’s monetary stance is also under the microscope as policymakers juggle the tightrope between inflation risks and growth concerns.

Across the pond, the Canadian dollar’s feeling the heat from sliding oil prices and mixed economic signals. With crude prices dipping, the commodity-linked loonie is under pressure. Add to that the uptick in U.S. Treasury yields boosting the greenback against the CAD, as investors chase higher returns amid hawkish monetary policies in North America. Both GBP and CAD are in sensitive spots, with traders laser-focused on fiscal policies and commodity market swings this week.

It’s a delicate dance: the UK grappling with fiscal tightening, while Canada rides the ebb and flow of energy markets and cross-border monetary influences.

Technical Analysis

On the daily chart, GBP/CAD is riding a solid uptrend, trading above both its short-term (1.78480) and long-term (1.79705) moving averages. The upward slope of these MAs confirms the bullish momentum. The pair is hovering in the upper half of the Bollinger Bands, which are widening—a nod to increased volatility and the potential for further gains.

The price has just breached the key level at 1.80711—the previous high—cementing the bullish narrative. Eyes are now on 1.81282, and a break above that could set the stage for a run towards 1.81913 and 1.82933. These resistance levels might throw up some roadblocks, but a strong push could see them taken out.

The RSI is sitting at 60.62, backing the bullish momentum but inching toward overbought territory—so a short-term breather isn’t off the table. Meanwhile, the MACD is in positive turf, with the lines spreading apart from the signal line, highlighting the strength of the upward move. The alignment of both new and old trend lines adds extra weight to the bullish outlook.

Alternative Scenario

Should the price slip back below 1.80711, we might see a pullback in the bullish momentum, but the overarching uptrend would still be intact. A drop below the crucial support at 1.78611, however, would flip the script, opening the door for a deeper correction.

Key Levels Overview

Resistance Levels:

• R1: 1.81282
• R2: 1.81913
• R3: 1.82933

Current Price: 1.80990

Support Levels:

• S1: 1.80262
• S2: 1.79631
• S3: 1.78611

Key Events to Watch

For sterling, the main event today is the Autumn Budget Statement—the so-called “mini-budget”—from the Chancellor of the Exchequer. Traders will be parsing every word for hints on fiscal direction. As for the Loonie, keep an eye on Bank of Canada Governor Tiff Macklem’s speech and the U.S. Crude Oil Inventories report, both of which could sway oil prices and, by extension, the CAD.

Conclusion

GBP/CAD is on a bullish trajectory, targeting resistance levels above 1.81282. A pullback could test support at 1.78611, but as long as prices hold above this mark, the uptrend stays in play. Upcoming economic events will be pivotal in shaping the pair’s short-term moves.

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