EUR/GBP and USD/CAD drop back, while GBP/USD edges higher
Euro continues to make gains against the pound, while a weaker dollar gives space for GBP/USD to edge higher and for USD/CAD to drop back from its recent high.
EUR/GBP edges back from higher high
EUR/GBP is dropping back from the high of Monday’s session but with the higher low of April and now the higher high of May, breaking above the late-March high and trendline resistance, it looks like a trend change is at hand.
In addition, the European Central Bank (ECB) is now talking about rate hikes in July, so while it is behind the Bank of England (BoE) in its moves to tighten policy, the future points towards higher rates in the eurozone. The UK economic outlook is also weakening too, putting pressure on the pound. All in all, it looks like even a drop back towards £0.84 would still leave the uptrend intact and provide space for a higher low and a fresh upward move.
GBP/USD edges higher after initial losses
GBP/USD remains fairly close to the lows of the week, with little sign of a major move higher, despite the small gains today.
A move above $1.24 might help to suggest a short-term low is in play, but even with this the longer-term downtrend is firmly in place. Given the UK outlook, which suggests that the next two years may see little to no growth, or even contraction, the pound may struggle to build much upside against the US dollar. Additional downside would develop with a drop below $1.225, pushing the pair towards fresh two-year lows.
USD/CAD drops back below C$1.30
After surging over the past few days the USD/CAD price has retreated, but having carved out a higher high, the uptrend of the past year remains firmly intact.
High stochastic and moving average convergence/divergence (MACD) readings point towards strong upside momentum, although a drop back below C$1.29 would suggest additional short-term weakness is at hand. Nonetheless, the pair’s upside case remains in place, as the Federal Reserve (Fed) looks to tighten policy over the medium term.
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