JPMorgan advises to buy CAD against the GBP
GBP/CAD keeps falling to the downside amid fears over the no-Brexit deal. According to JPMorgan, the pair will continue dipping throughout the whole of September. The bank has recently given a recommendation to its clients to sell GBP/CAD.
"We tactically sell a basket of EUR & GBP versus CAD, to capture near term risks (ECB, COVID-19) and structural concerns (Brexit, fiscal cliff) while CAD screens as a buy in our growth framework and is relatively underweight", claimed JPMorgan.
The bank forecasts GBP/USD will plummet to 1.29 by the end of the month, and USD/CAD will fluctuate near the 1.31 zone. At the same time, according to it, GBP/CAD may tumble to the three-month low of 1.69. However, the pair is expected to recover some of its losses and reach the 1.75 level by the end of the year.
Going a bit further over Brexit talks, the UK Prime Minister Boris Johnson claimed that the UK Government is going to impose new laws that can nullify some significant issues of the Brexit deal. The EU responded that in this case no trade deal would be done. The deadline to reach an agreement is scheduled for October 15, but both sides stay far apart from making a deal. However, analysts believe that in any case, the UK recovery will be under threat.
The Canadian dollar is not in the best position either amid falling oil prices, which slumped to levels unseen since July. Nevertheless, it has been performing better than the British pound. All attention now to the Bank of Canada’s rate statement at 17:00 MT time. Analysts anticipate the central bank will leave rates unchanged at the record lows of 0.25% and asset purchases – at 5 billion Canadian dollars per week. If the BOC’s tone is more dovish, the CAD will fall. However, according to Bank of America, the tone of the statement might be more hawkish, which will push the CAD to the upside and, therefore GBP/CAD to the downside.
Technical tips
GBP/CAD is edging lower. The move below the key psychological mark of 1.1700 will drive the pair to the next support of 1.6900. In the opposite scenario, if GBP/CAD surges above the high of July 28 at 1.7300, the doors towards the resistance of 1.7500 will be open. Follow the report and catch the market movement!
