A Screaming Buy Opportunity in GBP/CAD
- An Ideal Time to Buy the Dip
- Plenty of Fundamental Catalysts
- How to Lock in 4:1 Reward/Risk Ratio
As discussed previously, I’m in favor of buying dips in GBPCAD for the foreseeable future, and with the pair having fallen from 1.6961 on October 25 down to 1.6577 recently, we certainly have a dip to buy right now.
Strong UK construction PMI numbers should help boost the British pound (GBP) today after strong residential and commercial construction was reported last month and the number of construction jobs grew at the fastest pace in six years. This adds to the general picture of a strong, improving UK economy, which should further support GBP going forward.
With extensive event risks this week, including the Bank of England (BoE) rate decision on Thursday, two more PMI numbers, and Canadian employment figures due Friday, GBPCAD is likely to be very volatile this week, but that volatility could very much favor more upside in the pair.
From a technical perspective, GBPCAD is in a very attractive spot for longs while sitting right at the bottom of a nice daily channel, which provides a clear risk level and a very attractive risk/reward ratio.
Guest Commentary: A Screaming Buy Opportunity in GBP/CAD
Placing stops below the lows and targeting the top of the channel at 1.70 would give traders a risk/reward ratio of at least 4:1, which, considering the very attractive monthly set-up and the pound’s improving fundamental picture, makes this a deal not to be missed.
By Liam McMahon, currency strategist, GlobalFxClub.com
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.