Forex Market: GBP/CAD daily forecast

During yesterday’s trading session GBP/CAD traded within the range of 1.8304-1.8468 and closed at 1.8446.

At 7:03 GMT today GBP/CAD was adding 0.01% for the day to trade at 1.8446. The pair touched a daily high at 1.8458 at 6:05 GMT.

Fundamental view

United Kingdom

The ILO unemployment rate in the UK probably fell to 6.5% in the three months through May from 6.6% in the previous month, according to analysts’ projections. The indicator measures the number of unemployed people who are willing to work, are available and and are actively looking to be hired. The index is measured according to the ILO (International Labour Organization) standards, which are accepted internationally, that allows the labor market in different countries to be compared. The unemployment rate is calculated using information from a special study of the workforce.

In addition, the jobless claims probably declined by 27 000 in June, according to the median analyst’ forecast, following a 27 400 decline in the previous month. The jobless claims change indicator calculates the number of applications for unemployment in Britain, measured in thousands. It is taken from administrative records kept by the Centre for jobs service (formerly Employment Service). If the number of applications falls more than expected, demand for the British pound would certainly be supported.

At the same time, the claimant count rate probably decreased to 3.1% last month from 3.2% in May, according to the median experts’ estimate. The claimant count rate is an index that is calculated based on the number of claims submitted for unemployment benefits in the UK. It is represented as a change in the number of claims and as a percentage change from the workforce. Data for the number of applications for unemployment benefits is taken from the administrative records of the labor centres.

The Office for National Statistics will release the official data at 08:30 GMT. Higher-than-projected readings would have a bullish effect on the pound.

Canada

The Bank of Canada will probably keep its benchmark interest rate intact at 1.0%, where it has been since September 8th 2010. The Bank of Canada holds its monetary policy in order to set the short-term interest rates. This is accomplished by changing the so-called “overnight” rate. This is the interest rate that major financial institutions pay as interest in the exchange of money between them overnight. Changes in the overnight rate influence other interest rates, such as interest rates on consumer loans, as well as those tied to mortgages. The purpose of the Canadian monetary policy is to maintain the level of inflation as measured by CPI on an annual basis and for this purpose the central bank works closely with the government. Since 1995 the target range is set between 1 and 3 percent.

In November 2000, the bank introduced a system of eight fixed dates during the year, to discuss possible changes in interest rates. Decisions are taken by consensus. The Governing Council meeting usually starts on Friday, with the development of general economic analysis and future model of economic development, as well as identifying the trend and inflation. By the end of the day the bank announces its decision on the base rate and holds a press conference on the decision.

At 14:00 GMT, the Bank of Canada will announce its interest rate decision. In case the central bank preserves the main interest rate or in case the bank raises it, this will certainly heighten the loonie’s appeal.

Technical view

According to Binary Tribune’s daily analysis, in case GBP/CAD manages to breach the first resistance level at 1.8508, it will probably continue up to test 1.8570. In case the second key resistance is broken, the pair will probably attempt to advance to 1.8672.

If GBP/CAD manages to breach the first key support at 1.8344, it will probably continue to slide and test 1.8242. With this second key support broken, the movement to the downside will probably continue to 1.8180.