Currency - GBP / Canadian Dollar

The Sterling - Canadian Dollar exchange rate has been in a broad downward trend since the beginning of 2007. It is a broad range with the top being around C$ 1.63 and the bottom at C$ 1.43 and we tested the top of that channel in the last few days. As I write, we are in a downward track below the upward trend line that supported this pair through June and July. As long as we stay below 1.6290, there is every chance we will see further falls to C$ 1.58 and perhaps as low as C$ 1.5645. The Pound is just finding it hard to make gains as analysts and commentators try to determine whether the UK government’s cuts are slowing the economy. However, the Canadian Dollar is less buoyant than it was as its near neighbour and major client, America sees slowing growth. So the fact that the Pound has managed to maintain itself at the top of the channel above C$ 1.60 may be just a short term benefit for CAD buyers rather than a change of direction. There is a saying in trading that ‘the trend if your friend’ and if that is true, then this is the right level at which to be buying Canadian Dollars because the trend is still downward.