GBP/USD, USD/CAD, USD/MXN – North American Session Daily Forecast

GBP/USD

After limited movement this week, GBP/USD has sustained sharp losses on Wednesday. In the North American session, the pair is trading at 1.2368, down 0.95% on the day.

U.K. Political Turmoil Worsens

The extraordinary political drama has continued this week. On Tuesday, the U.K. Supreme Court held Prime Minister Boris Johnson had no right to suspend Parliament earlier this month. Parliament has convened on Wednesday, and a chastened Johnson is sure to face the displeasure of parliament and questions in his own Conservative party as to his ability to lead the government. Johnson has declared that he will take the U.K. out of the EU on October 31 even without a deal, but the opposition is just as determined to prevent a no-deal exit. The political chaos has pushed the pound sharply lower on Wednesday.

Technical Analysis

The U.S. dollar is broadly higher on Wednesday and has pushed the pound below two support levels. After breaking below 1.2420, the pair has tested support at 1.2380. This is the first time this line is seeing action since September 13. On the upside, 1.2510 has strengthened in resistance.

USD/CAD

USD/CAD has posted slight gains on Wednesday, erasing the losses seen on Tuesday. In North American trade, the pair is trading at 1.3276, up 0.26% on the day.

Ahead – U.S. GDP

With no Canadian releases for the remainder of the week, investors are waiting for the third-estimate GDP for the second quarter. The second estimate was revised to 2.0%, down from 2.1% in the initial release. The forecast for the upcoming release remains at 2.0%. As the Canadian economy is heavily dependent on its southern neighbor, a weaker GDP reading would raise concerns about the health of the U.S. economy and would likely weigh on the Canadian dollar.

Technical Analysis

USD/CAD is showing some upward movement on Wednesday. The pair has tested resistance at 1.3282 in the North American session and I expect this line to remain relevant for the remainder of the day.  Above, there is resistance at 1.3320, which has held since September 4. On the downside, there is strong support at the round number of 1.3200.

USD/MXN

USD/MXN has posted considerable gains on Wednesday. In the North American session, the pair is trading at 19.55, up 0.58% on the day.

It has been a rarity to see any sustained upward movement by the pair, as the peso has climbed 2.4% in September. However, the U.S. dollar has posted gains across the board on Wednesday and has also gained ground on the Mexican currency. Traders should keep a close look at the U.S. GDP release on Thursday, which could be a market-mover. Second-estimate GDP came in at 2.0%, and this remains the forecast for the third estimate. If this prediction is not on target, we could see some movement in the currency markets.

Technical Analysis

USD/MXN has put strong pressure on resistance at 19.45 since mid-September, but has been unable to consolidate above this stubborn line. However, the dollar showed some strength earlier on Wednesday and has climbed to a high of 19.61 on the day. The pair is now within striking distance of resistance at 19.70, which last saw action on September 6. On the downside, there is support at 19.20, which has held since August 1. This line has strengthened with the pair gaining ground on Wednesday.