The pound seems to be lighter after seeing strong U.K. data, but can it hold a candle to hawkish BOC expectations?
Here’s what I’m seeing on GBP/CAD.
Before moving on, ICYMI, yesterday’s watchlist checked out EUR/USD’s big test of parity. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
U.S. IBD/TIPP Economic Optimism index improved from 38.1 to 38.5
RBNZ hiked interest rates from 2.00% to 2.50% as expected
RBNZ: Will continue to lift OCR until inflation settles within target range
U.K. economy expanded by 0.5% in May vs. projected 0.1% uptick, previous 0.2% contraction
U.K. construction output accelerated from 0.3% to 1.5% vs. projected 0.2% increase
U.K. industrial production rebounded by 0.9% instead of staying flat
Chinese trade surplus widened from 503B CNY to 650B CNY vs. 430B CNY forecast
U.S. headline and core CPI at 12:30 pm GMT
BOC monetary policy decision at 2:00 pm GMT
BOC press conference at 3:00 pm GMT
Fed Beige Book at 6:00 pm GMT
Australian jobs data at 1:30 am GMT (July 14)
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
What to Watch: GBP/CAD
The BOC decision is coming up, fellas!
Will they hike by 0.75% or put the pedal to the metal with a full 1.00% rate increase?
Either way, the highly-anticipated event is expected to bring a lot of volatility for Loonie pairs, including GBP/CAD.
I’m seeing a neat bearish channel on its hourly time frame, with the pair inching closer to testing the resistance. This happens to be in line with the 1.5600 major psychological level, which might be strong enough to keep gains in check.
A shallow pullback could already find sellers at the 50% level that’s closer to the mid-channel area of interest or the 61.8% Fib that coincides with the 200 SMA dynamic inflection point.
The 100 SMA is below the 200 SMA to confirm that the selloff is more likely to resume than to reverse. In addition, Stochastic is already starting to head south after reaching the overbought region.
Earlier on, the U.K. economy printed a handful of upbeat mid-tier reports, which might be enough to lift the pound’s spirits. However, a hawkish BOC decision suggesting that more aggressive hikes are in the cards could mean plenty of downside for this pair.
Better set your stops right if you’re trading this one!