USD/CAD Picks Up Momentum as USD/GBP Falters over Brexit Worries

UNITED KINGDOM – The USD/CAD pair is using the previous day’s last-minute rebound to gain momentum and break away from the past few week’s sluggish performance. Meanwhile, the GBP/USD is moving in the opposite direction. Worries over Brexit has caused the pair to falter in today’s session.

The USD/CAD inched higher in the early hours of Europe’s trading session. It’s now almost at the 1.310 region, which is the high end of its daily trading level. The pair took advantage of the last session’s positive intraday bounce. It picked up around 45 pips from the 1.3100 handle.

The Canadian dollar’s safe haven standing is said to be the result of China’s lackluster reaction about the partial US-China trade agreement. It certainly made investors skeptical about how the two countries’ relations would play out.

The declaration of a phase-one agreement between China and US and the results of the recently concluded UK elections lifted fears of the state of the world economy, and the CAD received the better end of the deal. The currency bested all its rivals, except the Krone of Norway and the Swedish Krona.

While the CAD is enjoying the afterglow of these positive developments, worries about a No-Brexit deal have surfaced again and pushed the GBP/USD pair down. The pound receded against the dollar and is presently standing at 1.3290. It’s an unwelcome development, especially after its performance last week.

The pound rose to 1.3512 last week after the UK elections saw Prime Minister Boris Johnson outclassing his rivals. Analysts remain hopeful though and are expecting that the pair will recover and would begin a test of the resistance at 1.3492. The local peak is pegged at 1.3512 while the first critical support level stands at 1.3220.

However, Johnson’s recent statement that he’ll amend the Withdrawal Agreement Bill to curtail an extension has sent the GBP/USD down. The present iteration of the Bill allows for the Brexit transition period to be extended. Johnson’s proposal increases the odds of a no-deal happening.

The EUR/USD is performing well, and traders are confident it will continue to advance. They’re also anticipating the pair to test the key resistance at 1.1199. In case of a breakthrough, the euro is expected to gain more ground against the US dollar. It will then test the resistance at 1.1275.

But if the pair goes in the other direction, the EUR/USD will have crucial support at 1.1109. It will be followed by a 1.1066 resistance. The bullish sentiment will remain if the pair remains above these areas.