GBP/CAD retraces most of its early rally

The GBP/CAD cross ended the day with limited gains, as the early steep rally in pound was offset by fresh highs in oil prices, which boosted the CAD during the second half of the day.  GBP/CAD is currently trading at 1.8560, still 0.3% above its opening price.

As with all Pound crosses, the inexplicably rally is a result of the increasing uncertainty ahead of the upcoming Brexit referendum, and could be the first of several ahead of June 23rd. When it comes to oil, and the CAD, the commodity surged to fresh 2016 highs as woes in Nigeria keeps fueling hopes that the worldwide glut will soon be over.

GBP/CAD technical perspective

“Nevertheless, the risk remains towards the downside for the cross, as the 4 hours chart shows that the price stalled by the pip at its 200 EMA, whilst it kept developing below a bearish 20 SMA, and that the technical indicators have managed to correct extreme oversold readings, but remain far below their mid-lines,” said Valeria Bednarik, chief analyst at FXStreet. “A break below this week low of 1.8500, is still required to confirm a bearish continuation for this Wednesday.”

Support levels: 1.8500 1.8460 1.8420. Resistance levels: 1.8615 1.8680 1.8740.