GBP/CAD Eyes Key Levels Amid Short-Term Bullish Correction
Market Overview
The British Pound opened the week with a cautious rebound against the Canadian Dollar as markets responded to mixed UK PMI data and shifts in oil prices. While strength in UK services lifted overall sentiment, weakness in the manufacturing component capped the bullish momentum. Simultaneously, a dip in the US Dollar Index has offered some short-term relief for GBP, though rising oil prices may continue to underpin the Canadian Dollar and limit upside in GBP/CAD.
Technical Analysis
GBP/CAD remains within a defined descending channel on the four-hour chart. However, recent buying pressure has lifted the pair from the lower boundary of the channel toward key resistance at 1.85776. This level aligns with the 100-period and 34-period moving averages and the midline of the Bollinger Band, reinforcing its technical significance.
If buyers manage to close above this barrier, the next targets extend to 1.85988 and 1.86257. A breakout above the channel top would signal a potential trend reversal, with higher resistance levels at 1.86555 and 1.87036 coming into focus. Conversely, if sellers regain control, a move back below 1.85478 could see the pair retesting 1.84997. A breach of this lower support would confirm the continuation of the broader downtrend.
Momentum indicators remain mixed. The RSI is neutral, while MACD continues to trend lower, indicating hesitation among market participants.
Key Technical Levels
- Resistances: 1.85776, 1.85988, 1.86257, 1.86555, 1.87036
- Supports: 1.85478, 1.84997
Fundamental Drivers
Traders are assessing a mixed UK PMI report, with services expanding while manufacturing contracts. This divergence has introduced uncertainty into Sterling’s outlook. Meanwhile, Canadian Dollar strength may persist due to rising oil prices, which often benefit Canada’s energy-driven economy. Additionally, the weakness in the US Dollar has provided GBP/CAD with some breathing space, though further gains will likely depend on new macroeconomic catalysts.
Conclusion
GBP/CAD is testing key resistance within a broader downtrend. A break above 1.85776 could open the path to 1.86257, while a fall below 1.84997 would confirm bearish continuation.
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