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GBPCAD back at 1.60s after today’s Data

Market Analysis

GBPCAD, H4

Canada housing starts edged higher to 223.2k in August from the revised 222.0k unit growth pace in July (222.3k). The improvement mildly outpaced expectations. Multiple urban starts improved 2.7% to 145.6k in August while single detached starts fell 3.2k to 61.9k. By region, Toronto housing starts trended higher by 8% in August, driven by apartment starts. Vancouver saw a steady trend measure in August, with the pace of new home construction well above its historical average, says CMHC. The six month average of total housing starts (or the “trend” as labelled by CMHC), was 219.4k in August from 217.3k in July. It was the eighth consecutive month the “trend” measures has been above 200.0k.The 50 bp in BoC rate hikes since July are a headwind to Canada’s housing market, but a robust economy and employment growth suggest momentum will remain largely intact for sales and construction, although regional disparities will remain.

We saw today GBPCAD consolidating within 1.5975-1.6020 area, which can be consider also the area between 61.8 and 50.0 Fibonacci levels set since last week’s high at 1.6203.  On  the anticipation but also once the data released, the pair  manage to break above the intra-day resistance level which was the 50.0 Fibonacci level but also above the hourly 20-period SMA and later on  the round level of 1.6000.

After the data, a Long entry in a 4-hour time-frame was taken once the pair broke Friday’s high  at 1.6040,  with target at 50-period SMA, which is at 1.6070, and second target at the round level of 1.6100, which is also the 23.6 Fibonacci level.  Support was set at the confluence of 61.8 Fibonacci and 20-period SMA, i.e. at 1.5970. This entry is against the general picture of the cross which is that the pair  is in a weakening mode since May.

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Andria Pichidi

Market Analyst

HotForex

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