GBP/CAD Bearish Correction Levels

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GBPCAD recently fell through support at the 1.7200 major psychological mark then dipped to a low around the 1.6950 minor psychological mark. Price looks ready for a correction to nearby resistance levels.

The Fibonacci retracement tool shows where sellers are likely waiting. The 38.2% level lines up with the broken support at 1.7200 while the 50% level is close to the dynamic resistance at the moving averages. A larger correction could reach the 1.7350 minor psychological resistance that lines up with the 61.8% Fib.

Stochastic is turning higher to show that bullish pressure is present, and it looks like the oscillator has room to go before indicating exhaustion among buyers. RSI also just recently pulled up from the overbought zone to show that buyers are returning, so the correction could keep going for a while.

The BOE decision might be the main catalyst for pound price action, as the central bank is expected to start tapering weekly asset purchases from 4.4 billion GBP to 3 billion GBP during this policy announcement. No actual changes to interest rates are eyed, but upgrades to growth and inflation forecasts might be announced.

In that case, GBP could be in for more gains, and a break past the highest Fib could signal that bulls have the upper hand. Refraining from tapering might mean some downside for the pound, possibly allowing GBPCAD to slide back to the swing low right away, unless they drop forward guidance to start tapering in June.

As for CAD, the Canadian jobs report due on Friday could show a reduction of 165K in hiring for April after the stellar 303K increase reported for March. This could bring the unemployment rate back up from 7.5% to 7.8% for the month. An even weaker read could mean more downside for the Loonie while an upside surprise could spur a rally.

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