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GBP/CAD is insatiable
Information is not investment advice
GBP/CAD has been rising since the start of September. In November, it has broken above the ascending triangle, which is now providing support in the 1.7100/1.7060 area. This week the price is above the 100- and 200-week MAs at 1.71 and 1.7155 respectively. The weekly candlestick hasn’t closed yet, so there are reasons to worry that the breakout to the upside is a false one.
At the same time, there’s still some space on the upside until GBP/CAD hits the next major resistance: there’s a 100-month MA at 1.7285 and the 78.6% Fibo retracement of the May-August decline at 1.7335. These levels may attract the market. As a result, short-term buying with there targets looks possible. It will be necessary to be careful, though, when the price reaches the resistance and consider selling if signals from price action like pin bars arrive at this point.
On Thursday, the 2nd of February, the Bank of England will publish its report concerning interest rates and inflation data for the Eurozone. Professionals and investors anticipate that Andrew Bailey’s lead team of policy makers will likely raise interest rates to 4%; the highest in over a decade, for the tenth time in a row.
The first FOMC meeting comes after a buildup of anticipation from traders and investors alike, as the markets await what posture the Fed will take regarding the interest rates; would there be a hike or a cut in interest rates? Recall that the Federal Open Market Committee had previously ended the year 2022 with a 50bps hike, and an indication from Powell, the committee chairman, that the Fed could consider raising interest rates by 75bps in the course of the year 2023.
Western countries are trying to find other options for oil and gas supplies after a 10th package of sanctions, which will put more pressure on Russian oil and decrease global oil supply. Italy, for example, is in talks with Libya.