I indentify three key areas where I could short GBPAUD. I have setup a technical parameter to time my entry if the price at these levels BUT also I will also rely on what is brewing on the sentiment/fundamentals at the time the price at those levels, see if it contradicts my trading plan. (i.e if price at today's daily pivot and there were no reasons for me to believe Sterling will be bid and/or Canada will fall)
My rationale (and belief to be perfectly honest) to be short GBPCAD :
1. It has been said that the market have only 50-55% pricing in for the hike in January 2018. Governor Polloz have stated that their decision on raising interest rates will be data independent. Which brings me to the second point
2. Canada's Economic data was all supportive to CAD (GDP, Unemployment Rate, Employment Change), which makes it a high probability (not a certainty!)
3. Oil price is down at the moment, that might hold CAD further rally at the moment but bets on bullish OIL have increased since the speculation of OPEC production cuts, the bids for Oil Futures will eventually pick up hence CAD will be well supported due to that
4. Sterling buyers unload their positions after no deals/agreement struck yesterdays' Brexit negotiations. The theme which I expect to continue today
Risks for this plan to be invalidated :
1. Any positive development on the Brexit issue
2. Poor trade balance data CAD later today
3. Positive Service PMI (which I dont think will likely shift the sentiment/theme today)
My rationale (and belief to be perfectly honest) to be short GBPCAD :
1. It has been said that the market have only 50-55% pricing in for the hike in January 2018. Governor Polloz have stated that their decision on raising interest rates will be data independent. Which brings me to the second point
2. Canada's Economic data was all supportive to CAD (GDP, Unemployment Rate, Employment Change), which makes it a high probability (not a certainty!)
3. Oil price is down at the moment, that might hold CAD further rally at the moment but bets on bullish OIL have increased since the speculation of OPEC production cuts, the bids for Oil Futures will eventually pick up hence CAD will be well supported due to that
4. Sterling buyers unload their positions after no deals/agreement struck yesterdays' Brexit negotiations. The theme which I expect to continue today
Risks for this plan to be invalidated :
1. Any positive development on the Brexit issue
2. Poor trade balance data CAD later today
3. Positive Service PMI (which I dont think will likely shift the sentiment/theme today)