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Bullish GBP/CAD as Canadian Rate Hikes Vanish - Update

Bullish GBP/CAD as Canadian Rate Hikes Vanish - Update

2017-11-20 11:39:00
Nick Cawley, Strategist
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** Update **

Trade entered at 1.68500 on November 22.

Target 1 of 1.71685 made on November 28

Target 2 of 1.72200 made on November 29.

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)

Bullish GBP/CAD as Canadian Rate Hikes Vanish - Update

Chart by IG

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)

Bullish GBP/CAD as Canadian Rate Hikes Vanish - Update

Chart by IG

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

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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