BOC/BOE Divergence
GBPCAD is testing the December 2022 highs here and is threatening a breakout higher. The latest set of inflation data out of both the UK and Canada this week has widened the gap between the BOC and BOE in terms of market expectations. With the BOC having recently paused its tightening campaign, this week’s data strengthened the view that the BOC is likely to remain on hold near-term with Canadian inflation seen falling again last month. However, in contrast, UK inflation was seen unexpectedly jumping last month, prompting expectations that the BOE will be forced to continue hiking in coming months.
FOMC In Focus
In light of this we’ve seen GBP rallying firmly this week while CAD has weakened. This is a theme which looks likely to continue near-term. Today’s FOMC meeting will be the next key catalyst for the pair and GBP looks poised to gain either way. With GBP performing well against the current backdrop of a weaker USD, a continuation of this trend should propel GBPCAD higher. However, the Pound is also likely to fare better should USD rally on the back of today’s meeting with CAD likely to come under greater pressure meaning that for now, the focus remains on a further bull move.
Technical Views
GBPCAD
The rally in GBPCAD has seen the pair breaking out above the bearish trend line from 2021 highs. Price is now testing the 2022 December highs and with momentum studies bullish, the focus is on a break higher here targeting a move up to the 1.7129 level next.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.