Forex Market: GBP/CAD daily trading forecast

Yesterday’s trade saw GBP/CAD within the range of 1.7873-1.8017. The pair closed at 1.7935, gaining 0.19% on a daily basis.

At 7:43 GMT today GBP/CAD was up 0.56% for the day to trade at 1.8033. The pair broke the first two key daily resistances and touched a daily high at 1.8119 during early Asian trade, or the highest level since August 27th.

Fundamental view

Canada

The annualized index of consumer prices (CPI) in Canada probably remained steady at 2.1% in August, according to market expectations, after in June and May it climbed to 2.4%, which has been the highest level in 27 months. In monthly terms, the CPI probably remained flat last month, following a 0.2% drop in July. Shelter costs increased 3.0% during the 12 months to July, after rising 2.9% in June. Natural gas prices climbed 20.4% in July compared with the same month a year ago. Consumers also paid more for homeowners home and mortgage insurance as well as property taxes on a year-over-year basis in July, according to data by Statistics Canada.

Key categories in Canadian CPI basket are Shelter (accounting for 27.5% of the total weight) and Transportation (19.3%). Other categories include Food (with a 16.1% share), Household Operations, Furnishings and Equipment (11.8%), Recreation, Education and Reading (11.8%), Clothing and Footwear (5.7%), Health and Personal Care (5%), while Alcoholic Beverages and Tobacco Products comprise the remaining 3%.

Bank of Canadas (BoC) annualized Core CPI, which excludes prices of fruits, vegetables, gasoline, fuel oil, natural gas, mortgages, intercity transportation, and tobacco products, probably accelerated to 1.8% in August from 1.7% in the prior month. This is the key measure of inflation, on which the central bank bases its decisions regarding monetary policy. In case Core CPI increased more than projected, but still remained within BoC inflation range target (1-3%), this would support demand for the loonie, as Canadian dollar is also known. The official CPI report by Statistics Canada is due out at 12:30 GMT.

Technical view

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.7942. In case GBP/CAD manages to breach the first resistance level at 1.8010, it will probably continue up to test 1.8086. In case the second key resistance is broken, the pair will probably attempt to advance to 1.8154.

If GBP/CAD manages to breach the first key support at 1.7866, it will probably continue to slide and test 1.7798. With this second key support broken, the movement to the downside will probably continue to 1.7722.

The mid-Pivot levels for today are as follows: M1 – 1.7760, M2 – 1.7832, M3 – 1.7904, M4 – 1.7976, M5 – 1.8048, M6 – 1.8120.

In weekly terms, the central pivot point is at 1.7875. The three key resistance levels are as follows: R1 – 1.8221, R2 – 1.8393, R3 – 1.8739. The three key support levels are: S1 – 1.7703, S2 – 1.7357, S3 – 1.7185.