Remain Short GBPUSD; Short EURCAD; Pending Long USDJPY and GBPCHF

The GBPUSD has halted its two day decline to reach an intraday high of 1.5496. However, the pair remains capped by the 20-day moving average ahead of the Bank of England interest rate decision. As of late, traders are pricing in a four percent chance that the central bank will increase its key overnight lending rate twenty five basis points tomorrow as the economy faces major headwinds ahead. While comments subsequent to the report are unlikely, GBP traders will await the meeting of the minutes on September 22nd for insight on how the committee voted. A more dovish tone from the month prior will surely weigh on the British pound. Meanwhile, I took a short EURCAD position following the Canadian interest rate decision as the BoC hiked rates to 1.00 percent as widely expected, while adopting the “unusual” uncertainty language. Indeed, the pair has extended its three day decline and now looks poised to test the 100-day SMA for support. A break below this level will expose further downside risks towards 1.300.

Nonetheless, I am keeping a close eye on the USDJPY and the GBPCHF as both pairs remain bounded by the descending channel. I will look to enter a long position on the break of the upper bounds of the range.