GBP/CAD advances to near 1.8700

Pound's demand helped the GBP/CAD cross to recover some ground this Monday, with the critical 1.8500 support level still holding.

The Canadian dollar held pretty much flat against the greenback, in spite of oil's weakness, as the commodity plummeted on news that Iran would continue to increase its oil production to reach the market position it enjoyed before the sanctions, diminishing hopes of an output freeze deal amongst OPEC and non-OPEC producers. This may affect the cross during the upcoming sessions, particularly if the Canadian dollar turns sharply lower, most likely during the upcoming European opening.

GBP/CAD technical perspective

“In the meantime, the daily chart shows that the price remains well below a bearish 20 SMA, whilst the technical indicators have barely corrected oversold readings, maintaining the longer term risk towards the downside,” said Valeria Bednarik, chief analyst at FXStreet. “In the 1 hour chart, the technical indicators have lost upward strength, but remain within positive territory, as the 20 SMA heads north below the current level, providing an immediate support at 1.8590. In the 4 hours chart, the price is a few pips above an horizontal 20 SMA, whilst the technical indicators have lost upward strength around their mid-lines, suggesting the pair may resume its decline during the upcoming sessions.”

Support levels: 1.8590 1.8550 1.8500. Resistance levels: 1.8680 1.8730 1.8775.