Forex Market: GBP/CAD daily forecast

During yesterday’s trading session GBP/CAD traded within the range of 1.8252-1.8354 and closed at 1.8320.

At 7:09 GMT today GBP/CAD was gaining 0.09% for the day to trade at 1.8328. The pair touched a daily high at 1.8352 at 3:25 GMT.

Fundamental view

United Kingdom

At 11:00 GMT Bank of England is to announce its decision on monetary policy. The benchmark interest rate will probably be left unchanged at 0.50%. Short-term interest rates are of utmost importance for the valuation of national currencies. In case the central bank left intact or raised borrowing costs, this would have a bullish effect on the sterling.

At the same time, the monthly pace of bank’s monetary stimulus will probably be left intact as well, at 375 billion GBP. The central bank issues new money in order to purchase gilts from private investors such as pension funds and insurance companies. In case monetary stimulus is increased (in order to further spur economic growth), this will usually devalue nation’s currency.

Canada

The number of building permits in the country probably rose 4.0% in April compared to a month ago, according to the median estimate by experts. In March permits issued by the government unexpectedly declined 3.0%. Building permits, as an indicator, provide information regarding demand in Canada’s housing market. A higher than anticipated number would be supportive for the Canadian dollar. Statistics Canada is to release its monthly report at 12:30 GMT.

Activity among purchasing managers in Canada probably increased in May, with the corresponding PMI coming in at a seasonally adjusted value of 58.4. In April the index stood at 54.1.

This indicator is based on a survey sponsored by Richard Ivey School of Business and Canadian Purchasing Management Association. It encompasses 175 respondents in both public and the private sector, selected in accordance with their geographic location and activity, so that the entire economy is covered. Activity among purchasing managers is closely watched by market players, as managers usually have an early access to data regarding performance of their companies, which could be used as a leading indicator of overall economic activity.

Readings above the key level of 50.0 are indicative of expansion in activity. Higher than expected readings of the PMI would bolster demand for the loonie. The official result is due out at 14:00 GMT.

Technical view

According to Binary Tribune’s daily analysis, in case GBP/CAD manages to breach the first resistance level at 1.8365, it will probably continue up to test 1.8411. In case the second key resistance is broken, the pair will probably attempt to advance to 1.8467.

If GBP/CAD manages to breach the first key support at 1.8264, it will probably continue to slide and test 1.8207. With this second key support broken, the movement to the downside will probably continue to 1.8161.