GBP/CAD Buyers Aim for Key Breakout Amid Low Trading Volume

30/09/2024

Market Overview

On Monday, the GBP/CAD pair showed bullish momentum as buyers attempted to break through a critical resistance zone above 1.800. Canadian markets were closed due to a national holiday, resulting in lower trading volume for the Canadian dollar. However, despite weaker-than-expected UK growth data, the British pound gained against the Canadian dollar as buyers took control. The focus now lies on whether this upward momentum can push the pair higher through a key resistance zone.

Technical Analysis

GBP/CAD continues its three-week uptrend on the four-hour chart, with buyers currently challenging the 1.80869 resistance level. If the momentum remains strong and buyers succeed in breaking this level decisively, the next upside targets will be 1.81038, 1.81127, and 1.81253. A sustained break above these resistance levels could open the door to further gains, with 1.81491 being the next key level for buyers to aim for.

Momentum indicators support this bullish scenario, with the RSI indicating increasing buying pressure and the MACD maintaining a bullish signal. Price action is trading above the 34-period and 100-period moving averages, further confirming the strength of the uptrend.

Alternative Scenario

Should buyers fail to break above the current resistance zone, a price pullback could see the pair testing support levels at 1.80558 and 1.80247. A sustained move below 1.80247 would invalidate the bullish scenario and shift the outlook to bearish, potentially leading to further downside.

Key Levels Overview

Resistance Levels:
- Resistance 1: 1.81038
- Resistance 2: 1.81127
- Resistance 3: 1.81253
- Resistance 4: 1.81491
Current Price: 1.81000
Support Levels:
- Support 1: 1.80869
- Support 2: 1.80558
- Support 3: 1.80247

Key Events to Watch

This week, several high-impact events are likely to influence the British pound, while fewer events are expected for the Canadian dollar. For the UK, investors will closely monitor the Final Composite PMI and Final Services PMI due on October 3, 2024, as these indicators offer valuable insights into the overall economic health. The Construction PMI report scheduled for October 4, 2024, will also be significant, as the construction sector plays a key role in driving UK growth.

For the Canadian dollar, the primary event will be the Manufacturing PMI report on Tuesday. Although this is the main data release for CAD, the overall trading volume for the Canadian dollar could remain subdued until the Canadian markets return to full activity following Monday’s holiday.

Conclusion

GBP/CAD is testing a key resistance level at 1.80869 as buyers attempt to continue the pair’s three-week uptrend. A successful breakout could lead to further gains, with 1.81038 and 1.81491 as the next targets. However, failure to break higher could trigger a pullback toward support levels, with 1.80247 acting as a key level that could reverse the current bullish trend. Traders should stay alert to upcoming economic data from both the UK and Canada, as these reports could introduce volatility and further shape the direction of the pair.