The Great Britain Pound (GBP) extended upside movement against the Canadian Dollar (CAD) on Monday, increasing the price of GBPCAD to more than 2.0240. The technical bias however remains bearish because of a Lower Low and Lower High in the recent wave.
The GBP/CAD closed the week in the red and having practically erased all of its monthly gains amid a steady decline in Pound, as investors dropped the currency in benefit of safer investments in a risk-averted scenario. The bearish tone is now firmer according to the daily chart that shows that the price has extended below a horizontal 20 SMA, whilst the technical indicators maintain strong bearish slopes below their mid-lines.
In the 4 hours chart, the 20 SMA has extended its decline well below the 200 EMA while the RSI indicator heads lower around 38, although the Momentum indicator diverges higher, and aims to cross its 100 level. With Friday’s low having been set at 2.0167, additional declines below it should lead to a retest of this month low of 2.0029 with large stops below the 2.0000 risking a continued technical sell-off if triggered.
The nation’s gross domestic product, the broadest measure of economic output, revved up to a 3.9% seasonally adjusted annual growth rate in the second quarter, according to a revised reading from the Commerce Department on Friday, after its paltry 0.6% pace in the first quarter. That suggests the economy grew at about a 2.3% pace in the first half of the year, a slightly higher pace than in the first half last year.
Considering the overall technical and fundamental outlook, buying the pair around current levels could be a good strategy in short to medium term. The trade should however be stopped out on a daily close below the 2.0170.