Trading Outlook – GBP/CAD

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Originally updated: 07:00

Trading Bias: LONG

Currency pair: GBP/CAD

Current Sentiment: Bullish

In today’s trading session we will be focussing on buying opportunities on the GBP/CAD.

Fundamentals:

With little in terms of overnight news flow to provide a reason to get into the markets we remain on the sidelines at this stage of the session, later in the session we have UK retail sales and Canadian core retail sales. Both figures are expected worse than previous however both will have little lasting effect in terms of market impact with both central banks focal point been centred elsewhere.

We have very positive sentiment on the GBP this week – the BoE have shrugged off weak CPI stating that it isn’t weighing on their time frame to hike rates whilst affirming that their current basis for gauging health and consequent tightening of policy in the economy is labour data and wage growth, all of which have been exemplary recently thus supporting the GBP.

What we want to look out for on the CAD is a continuation of low oil prices as this is overshadowing all other key economic data pertaining the CAD over recent months as prices bottom out – if oil prices show signs of recovery this will support the currency.

We had a positive Canadian data point yesterday, so what we’re ideally hoping for is negative UK data coupled with further positive Canadian data, this will cause the pair to spike down.
However because these are minor data points and we know that fundamentally the CAD is bearish with the BoC recently cutting rates and prepared to do so again whilst the GBP is bullish with rate hike expectations being brought forward following a recently hawkish BoE – we want to be viewing any dip on this pair as an opportunity to get in and buy the GBP back.

Technicals:

We expect this pair to rally during today’s session.

There is strong support at 1.9220 – 1.9190 which could provide trading opportunities should the price pull back. Look for the price to bounce off this level if it retraces back to it.

Remember to be aware of intra-day news as this can very often change the sentiment which makes our trade weaker. Look for any news that could be negative for this pair, which would change the sentiment to bearish.

Other Market Moving News:

The Eurogroup meetings will be reconvening throughout the session with the last commentary from yesterday on the ongoing Greek bailout talks, being that German creditors are beginning to lose patience with the new Greek ruling party and there approach to discussions.

We also have French and German flash manufacturing PMI with 50 + being the key level to achieve to indicate a recovering economy.

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