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Tag: GBPCAD

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Sterling Digest, May 7 2013: April tops, May bottoms

GBPUSD 1 WEEK CHART
May selloffs

Cable ended April hitting the 50% Fibonacci retracement level to the PIP. Pretty impressive for a 30-day rally. As $GBPUSD tops out at 1.5606, it begins the 1st week of May with a lower high (as of this writing). Seasonality trends would have traders note that cable has topped out in April each of the last 3 years. In May 2010, cable was below 1.55 and fell to brand new long-term lows by the end of the month. $GBPUSD finds itself in a similar situation with price action only 40 pips above 1.5500. This week’s BoE rate decision will be closely watched thanks to the RBA’s long-awaited interest rate cut. Most still think the BoE holds policy until Mark Carney takes the helm so Thursday’s event could be a non-event. As such, sterling could be a mixed bag. The ECB, RBA, and BoJ are clearly dovish while the BoC and RBNZ are hawkish. The Fed is on watch but positive data continues to build the case for a strong USD. The BoE’s decision sets the tone for sterling the next 30 days. Which way will the Old Lady lean?

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Sterling Digest, April 30 2013: April rallies bring May selloffs

Slow Trek Into Recession movie poster
Could GBP’s best days be behind it?

Today is the last day of the month and sterling has enjoyed April. $GPBPUSD closed last week at 2-month highs with a rally that finally took it above 1.55 to 1.5546. $GBPAUD rallied to new highs above the 1.50 major psychological level not visited since Feburary. $GBPCAD moved to spike highs at 1.5823. Needless to say, its been a breakout month. Despite the bullish price action, sterling is still very much correcting on long-term timeframes. All the aforementioned pairs are at or around the 50% Fibonacci levels on the weekly charts. And tomorrow is May. For the last 2 years, $GBPUSD has seen a tremendous sell-off in May. Being at new highs and technical levels sets sterling up for a fall more dramatic than its rally.

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Sterling Digest, April 16 2013: terror attacks

Iron Lady rightfully(?) kicking the King of Capitalism

What happened Monday? What a trading day. Commodities fell off a cliff in a real scary way. $GBPAUD, $GBPNZD, and $GBPCAD rallied over 200 pips in yesterday’s trading session as those commodity dollars took a major hit along with $GLD, $SLV, and $CL_F. It was incredible. Then bombs exploded later Monday morning during market hours in Boston. Another terrorist attack in the United States. The USD rallied slightly on the news as $GBPUSD tumbled below support but in today’s trading session cable looks bullish again. The markets feel a bit more stable today as the sterling continues to firm except versus the euro. $EURGBP has taken out major resistance at 0.8570 as it has rallied to new highs so far today at 0.8582. What is the world coming to?

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Sterling Digest, April 8 2013: freedom to grow

Political cartoon from The Independent. Bust and Bust for sale
This may not work but neither will austerity

As expected last week, sterling has strengthened though mostly on the back of weaker fundamentals elsewhere in the world. The weaker-than-expected US jobs report helped $GBPUSD surge above 1.5250 resistance that had capped rallies since February. The weak Canadian jobs report also sent $GBPCAD to new highs at 1.5650 also not visited since February. The $GBPAUD reached new highs at 1.4825 on the back of a still dovish RBA. The only sterling pair that hasn’t found GBP strength is the $EURGBP as the EUR finds a Cyprus bottom for reasons outlined well in the linkfest below. It’s a light calendar this week with all eyes on Wednesday’s FOMC minutes release.

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Sterling Digest, April 1 2013: the quarter for sterling

A handful of money, UK sterling coins
Start the new quarter with a handful of sterling

Happy new quarter! The 1st quarter of 2013 has seen US and UK equity markets rally into new highs; the euro rally until Cyprus hit; and sterling plunge to new lows all the while. As the new quarter gets underway, it is an interesting time to think about sterling rally. Since Cyrpus has undermined confidence in the European banking system, the $EURGBP has fallen accordingly. Likewise, the $GBPUSD, $GBPAUD, $GBPNZD and $GBPCAD are failing to move lower after hitting new yearly lows. It stands to reason that this next quarter could bring a sizable correction to GBP weakness as sterling enjoys safe haven flows and a central bank on hold until its new governor takes the helm.

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Sterling Digest, March 11 2013: the charts that worry

Various denominations of GBP in regular visible light
Price doesn’t look this pretty

Sterling did produce a correction rally last week as $GBPUSD made a high at 1.5200, $GBPAUD as high as 1.4850; $GBPNZD as high as 1.8350; $GBPCAD as high as 1.5650; and $EURGBP as low as 0.8590. These rallies, for the most part, kept GBP below previous long term lows. This technical development was certainly the case for the $GBPUSD, $EURGBP, and $GBPNZD where all pairs have broken long term support levels. While the BoE did not move on additional QE, the surprising development of the week was the BoE’s possible change to a dual mandate to combat both inflation and unemployment. With this new trading week very light out of the UK, expect sterling price to continue to weaken across the board. While US news and the RBNZ rate decision will influence those respective currency pairs, the protocol with sterling is clearly to sell the rallies.

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Sterling Digest, February 25 2013: hardly at extreme levels

KAL Cartoon in The Economist
Put GBP on the roof and you illustrate current sterling sentiment in the market

Sterling weakness accelerated last week and culminated in the UK loosing its AAA credit rating on Friday. Now that monetary policy is dovish, economic activity nil, and credit rating downgraded, sterling has entered this new week of trading with a trifecta of negativity. And yet traders are hardly short GBP yet. In fact, I don’t think we will have reached extreme levels of short GBP trades until, $GBPUSD trades at 1.4750, $EURGBP at 0.8900, $GBPAUD trades below 1.4500, $GBPCAD below 1.5400, and $GBPNZD below 1.8000. Until price gets to those levels, expect corrections to be short-lived as the weak sterling trade gains momentum.

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Sterling Digest, February 11 2013: a fading rally

Kipper Williams cartoon, The Guardian
So Carney is not the UK’s savior?

GBP ended last week in consolidation as the technicals were helped in large part to the fundamentals when UK economic data surprised on the strong side and incoming B0E governor Carney surprised markets by steering clear of his dovish Davos comments on monetary policy. All this helped sterling rally last week to new highs across the board. This week holds a light economic calendar from the UK which may allow sterling to continue its consolidation rally. However, watch the current market sentiment to change on a whiff of bad news. With CPI, retail sales, and the BoE Inflation Report out this week, any of these news events has the potential to send sterling back on its long term bear trend.

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GBPCAD Fails To Hit Bottom

After hitting the top of the range at 1.6214 to begin the new year, the $GBPCAD has been working its way down towards the bottom of the range all month. Last week, it hit a low of 1.5670 before it abruptly turned and rallied higher on the dovish Bank of Canada rate decision. While the BoC left rates unchanged, they downgraded the Canadian economy sending the CAD lower. Prior to this statement, the market viewed the BoC as hawkish helping drive the $GBPCAD currency pair lower. With this shift in fundamentals, albeit temporary most likely, the currency pair has turned higher on a weaker CAD without the pair hitting the bottom of the range at 1.5400.

GBPCAD weekly chart

With the new high last week at 1.5965, is the $GBPCAD poised to go higher still towards the range highs at 1.6200?

GBPCAD daily chart

For the answer, watch the area between 1.5850 – 1.5900 for bids. If the $GBPCAD can remain supported by 1.5850 AND make a new high higher than 1.5965, then I suspect this pair can continue higher to the top of the range above 1.6000. After Monday’s trading session, $GBPCAD failed to do either and fell to lows at 1.5780. Price action confirmed its bearish direction with a daily close below 1.5800 support. As Tuesday’s session opens, the pair is poised to finish its business and hit the bottom of the range.

gbpcad

With a very light economic calendar out of the UK and Canada this week, it is entirely possible that we see the CAD continue to strengthen into Canada’s GDP release on Thursday. In contrast with the contraction in the UK economy reported last week, the market may rally CAD vs. GBP on a simply positive number. Any number higher than expected will move the $GBPCAD decisively lower to the range bottom at 1.5400.

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Sterling Digest, January 27 2013: follow the trend

KAL Cartoon in The Economist
Can the British economy really afford to abandon the EU?

Last week was epic for sterling. The $EURGBP rallied to new highs above the psychologically important 0.8500 level. The $GBPUSD, $GBPNZD, $GBPAUD, and $GBPCAD all fell to fresh 2013 lows early in the week heading to the Bank of England minutes release. However, when the BoE minutes revealed that it was ready to end quantitative easing and unemployment in the UK fell to new lows, sterling rallied off the lows. In fact, thank in large part to the Bank of Japan, the $GBPJPY rallied to its highest levels in over 2 years. Despite policy makers in the BoE calling for an end to QE, the economic realities of the UK may not allow that to happen. And since BoE meeting minutes are backward looking, sterling may not be able to sustain its Friday gains in this new week of trading. With a very light economic calendar from the UK this week, expect sterling to trade very technically and at the whims of the USD with the $FED rate decision looming mid-week.

 

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