UK lending data showed mortgage lending dipping to 64.5k in April from 66.9k in March, below the median forecast for a 66.3k outcome and the lowest level of lending since last September. The data suggests weaker demand several months down the track. Sterling has continued to spin lower, and is presently showing 0.5%-plus declines against the dollar, euro and yen. However Sterling presents gains against Canadian Dollar, which is mainly driven by Oil price, and despite the positive Canadian Data, capped today at 1.7380, which is week’s high.Canada real Q1 GDP grew 3.7% (q/q, saar) after a marginally revised 2.7% improvement in Q4 (was +2.6%).The increase was very close to the BoC’s projection of a 3.8% clip and just marginally firmer than our 3.5% estimate. WTI crude fell 2% to $48.30 bbl after reports of heavy Libyan pumping, while awaiting the EIA inventory data, postponed a day after the shortened holiday week.
Hence despite the solid Canada GDP report earlier, GBPCAD has since rallied to 1.7380 highs, with the CAD coming under pressure from faltering oil prices. Yesterday’s (May 30) close saw GBPCAD close at a week’s high following a reversal from below 1.7191 on Friday. Today’s hammer candle in the daily chart and the fact that GBPCAD breached and broke the key 20 period MA in the 4-hour chart, following the rejection of the month’s low at 1.7160, suggested that weakness has probably ended.
A LONG position was opened today at 1.7137 with target 1 at the crossing of 50 and 200 period EMA in the 4-hour chart, at 1.7450. Target 2 was set at 1.7550. In the 4-hour chart Parabolic SAR turned positive while RSI is at 56, with a sharp upwards slope. The higher time frames are still in down trends, with a strong Bearish Rounding top in the daily chart.Hence this position is against the prevailing trend. Support was set at month lows, i.e. 1.7185.
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