USD/CAD Retains Bearish Sequence Despite Mixed Canada Employment Report


Talking Points:

 GBP/USD Nullifies Threat of Head-and-Shoulders Reversal Ahead of BoE Meeting.

 USD/CAD Preserves Bearish Sequence Despite Lackluster Canada Employment Report.

 

DailyFX Table

Ticker

Last

High

Low

Daily Change (pip)

Daily Range (pip)

GBP/USD

1.3183

1.3224

1.3094

81

130

GBP/USD is on the cusp of testing the 2017-high (1.3268), with the pair at risk for a larger advance ahead of the Bank of England’s (BoE) September 14 meeting as it nullifies the threat of a near-term reversal.

The BoE will have much to discuss as the both the headline and core U.K. Consumer Price Index (CPI) are expected to pick up in August, while Average Weekly Earnings are projected to increase for the second consecutive month in July. Keep in mind, Sir David Ramsden appointment to the Monetary Policy Committee (MPC) is likely to yield a 7 to 2 split as Ian McCafferty and Michael Saunders continue to push for a rate-hike, but signs of heightening price pressures may encourage the BoE to slowly abandon its wait-and-see approach as some officials argue ‘the withdrawal of part of the stimulus that the Committee had injected in August last year would help to moderate the inflation overshoot while leaving monetary policy very supportive.’

In turn, the fresh rhetoric coming out of the BoE may largely shape the near-term outlook for GBP/USD as ‘monetary policy could need to be tightened by a somewhat greater extent over the forecast period than the path implied by the yield curve underlying the August projections.’

GBP/USD Daily Chart

GBP/USD Daily Chart

 

  • Topside targets remain on the radar for GBP/USD as it continues to carve a series of higher highs & lows, while the Relative Strength Index (RSI) highlights a bullish trigger as it breaks out of the downward trend from earlier this year.
  • Break of the 2017-high (1.3268) may spark a more meaningful run at the 1.3300 (100% expansion) handle, with the next region of interest coming in around 1.3370 (78.6% expansion) followed by the 1.3460 (50% retracement) zone, which sits just above the September 2016-high (1.3445).
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