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** Update - Trade entered on November 22 at 1.68500 **
Canadian interest rates are unlikely to be hiked further, according to Bank of Canada deputy governor Carolyn Wilkins, putting the Loonie under further downside pressure. In a shift towards a new wait-and-see stance, the central bank official warned that even if inflation picked-up towards 2% - the middle of the bank’s 1%-3% range - economic growth must be monitored carefully before tightening monetary policy further. Speaking in New York, Wilkin’s added that another reason for caution –“in this case more of a 'wait and see' approach - is related to a desire to avoid having to reverse policy direction abruptly in the future," The Bank of Canada raised rates by 0.25% in July and September.
And with the prop of monetary further monetary tightening removed, and with NAFTA talks still ongoing, the Canadian Dollar may come under more downside pressure, especially against a currently strong Sterling buoyed by the belief that the current Brexit impasse is about to be broken.
The current chart set-up remains bullish for GBPCAD with the 23.6% Fibonacci retracement level at 1.68544 an ideal place to go long, if the market pulls back, leaving the November 1 high of 1.71685 the initial target.
Chart: GBPCAD Daily Timeframe (June 6 – November 20, 2017)
And on the weekly chart, the 100-day ema at 1.72200 is a secondary upside target, with a close above their opening the May 8 high around 1.78500.
Chart: GBPCAD Weekly Timeframe (April 20, 2015 – November 20, 2017)
Entry Point: 1.68500 (Just below the 23.6% Fibonacci retracement level)
Target 1: 1.71685 (November 1 high)
Target 2: 1.72200 (Current 100-day ema)
Stop-Loss: 1.67300 (August 3 high)
--- Written by Nick Cawley, Analyst
To contact Nick, email him at nicholas.cawley@ig.com
Follow Nick on Twitter @nickcawley1
