With the British pound continuing to struggle our attention swings back to a currency cross that we last discussed three weeks ago. Although the GBPCAD managed to rally in mid-September, the pair failed to breach the three-month range top at 1.7530, leaving the downside pressure intact.
Since the retest of this area on September 15th, the pound cross has weakened to the tune of 520 pips. But more importantly, the GBPCAD is once again flirting with the 1.70 handle, a level that has been influential since mid-July.
You can see from the chart below that since closing above the level on August 23rd, it has acted as support on seven separate occasions including yesterday and today.
Should the 1.70 handle give way on a 4-hour closing basis, we could see the pair revisit the multi-year low at 1.6605. Those requiring additional conviction can, of course, wait for a daily close below the level rather than a 4-hour close.
On the flip side, if buyers manage to push prices back above recent highs at 1.7235 there’s a good chance that we’ll see a move back toward the September high at 1.7524.
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