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Faraday: Why GBP will continue to pound CAD

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Faraday Research analyst Thomas Light says GBPCAD is a great example of the weakening in commodity currencies against European currencies. With oil prices low and the Bank of England poised to hike interest rates, he believes sterling will continue pound loonie.

Looking at the weekly candle chart, prices have been trending higher since April, Light says. According to the daily candle chart, Friday’s price action broke and closed above a tight consolidation range.

Light says that the last time this happened, the market rose 300 points and with oil hitting fresh lows on Friday, he sees no reason why GBPCAD cannot put in another strong move.

His strategy is to buy GBPCAD on a pullback to the breakout zone at 2.0400 with a stop below support at 2.0322 and initial targets coming in at 2.0620.