Trade of the Week: GBPCAD and Oil

TL;DR

Brexit extension impacts pound, oil drives Canadian dollar, potential downside pressure on GBP/CAD.

Transcript

hello my name is Kru golems senior market analyst at Honda today we're going to talk about the pound versus the Canadian dollar quite clearly one of the more interesting currency pairs right now given that there's so much focus on the UK and therefore on the currency because of the breaks its situation but also because we've got a big driver in the... Read More

Key Insights

• 💷 Brexit extension request by Theresa May is impacting the pound's stability.
• 🛢️ Oil price movements are strengthening the Canadian dollar and influencing the GBP/CAD pair.
• ❓ Potential downside pressure on GBP/CAD as market anticipates Brexit extension.
• 🛀 Pound shows weakness in price action despite the likelihood of an extension.
• ☠️ Canadian dollar's correlation with oil prices affects GBP/CAD exchange rate.
• 💷 Market sentiment towards Brexit outcomes influencing pound's movements.
• 🛀 Profit-taking on pound rallies due to priced-in Brexit extension expectations.

Questions & Answers

Q: How is the current Brexit situation impacting the pound vs. Canadian dollar exchange rate?

The uncertainty surrounding Brexit, especially regarding the extension request by Theresa May, is causing volatility in the pound. This uncertainty is reflected in the GBP/CAD pair as well, with potential downside pressure.

Q: What role do oil prices play in the movement of the Canadian dollar?

Oil prices have a significant impact on the Canadian dollar as Canada is a major oil exporter. The recent climb in oil prices has strengthened the loonie, leading to movements in the GBP/CAD pair.

Q: How are market participants reacting to the possibility of a Brexit extension?

Market participants seem to be pricing in the likelihood of a Brexit extension, resulting in profit-taking on pound rallies. This anticipation is contributing to the downside pressure on the GBP/CAD pair.

Q: What are the key levels to watch in the GBP/CAD pair amid Brexit uncertainties?

The 174 and 170 levels are crucial support levels for the GBP/CAD pair. A break and hold below 170 could signal further downside potential in the exchange rate.

Summary & Key Takeaways

• Pound vs. Canadian dollar currency pair affected by Brexit extension and oil prices.

• Pound shows weakness in price action with lower highs despite potential extension.

• Canadian dollar strengthens due to oil price movement, putting pressure on GBP/CAD pair.