The British pound has been struggling against the Canadian dollar, dropping from its 2024 highs to a multi-month support zone.
Lately, though, GBP/CAD has calmed down from its steep declines. Could this signal a longer-term bounce?
We’re taking a closer look at the 4-hour chart for clues:
GBP/CAD 4-hour Forex Chart by TradingView
Sterling has been under pressure since late December, weighed down by concerns over the U.K.’s fiscal conditions and the Bank of England’s dovish pivot.
On the flip side, the Canadian dollar is riding high, supported by a bounce in crude oil prices and start-of-year optimism. It’s even outperforming other “risk” assets like the pound and other commodity-linked currencies!
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on the British pound and the Canadian dollar, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
GBP/CAD, which tumbled from its 2024 highs near 1.8225, has found its footing around the 1.7450 zone.
What makes the area interesting is that it’s close to the S1 (1.7454) Pivot Point line AND a support area that hasn’t been broken since mid-2024.
If we see more green candlesticks here, buying pressure could build, keeping GBP/CAD inside its months-long range.
Potential targets include the Pivot Point at 1.7727 or the mid-range level near 1.7800 if bullish momentum holds.
But if the bears return and GBP/CAD breaks below 1.7450, the pair could drop to multi-month lows.
In a downside breakout, watch for previous support zones around 1.7400 or 1.7280 to come into play.
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment!