The Pound-Canadian Dollar rate has so-far found strong support at 1.72 but it's emerged from a week-long slide with its upside potential diminished, technical analysts say, and potentially with the gravitational force of the 2020 range floor growing stronger as the outlook for Sterling darkens.
The Pound-Canadian Dollar rate fell sharply last week as oil prices recovered by double-digit percentages and Sterling was weighed down by domestic concerns, although the the British currency is besieged by fundamental risks on all fronts and could fall falling further over the coming days.
The Canadian Dollar's gradual trend of appreciation against the Dollar was on full display in mid-week trade amidst broadly buoyant investment conditions and a newfound strength in crude oil prices, while gains against the Pound pushed GBP/CAD back into an increasingly entrenched range.
The Pound-Canadian Dollar rate was on course for a second consecutive loss Tuesday but is expected to remain underpinned by a cluster of nearby technical support levels in the coming weeks and could be aided higher if the coronavirus prompts the U.S. and China to come to blows again.
The Pound-Canadian Dollar rate tested the top of its 2020 range last week but the two currencies are among the most vulnerable to any continued wobbles in the stock markets while each face a full plate of domestic risks over the coming days that could keep the exchange rate locked in a wide four cent range.
The Canadian Dollar retains a broadly constructive tone on global foreign exchange markets heading into the end of what has been a month of broad appreciation, moving higher alongside its commodity currency peers in response to an ongoing improvement in global investor risk sentiment.
The Canadian Dollar simply does not respond to movements in crude oil prices as it did ten years ago, shows a research note from Royal Bank of Canada, suggesting that a popular assumption that the Canadian Dollar is an 'oil currency' could need to be queried.