GBP/CAD Forecast Ahead of the BoE Rate Decision
The GBP/CAD price has been in a strong bearish trend in the past few months. The pair dropped to a low of 1.5041, which was the lowest level since 2010. It has crashed by more than 11% this year and by over 15% from the highest level in 2020.
BoE decision and Canada inflation
The GBP/CAD price will be in the spotlight this week as investors focus on important data from Canada and the upcoming interest rate decision by the Bank of England.
On Tuesday, data by Statistics Canada showed that the country’s consumer inflation pulled back in August. The headline CPI dropped from 0.1% to -0.3%. The drop was dipper than the median estimate of -0.1%. As a result, inflation dropped from 7.6% to 7.0%.
Core inflation, which excludes the volatile food and energy products, dropped from 6.1% to 5.8%. It also dropped from 0.5% to 0.0%. At the same time, the median and trimmed inflation dropped to 4.8% to 5.2%. Therefore, there is a likelihood that the Bank of Canada will likely slow its rate hikes in the coming months.
The next key catalyst for the GBP/CAD pair will be the upcoming interest rate decision by the Bank of England (BoE). Economists expect that the BoE will continue tightening interest rates in the coming meeting on Thursday. Precisely, they expect that the pair will hike by 0.50%, which will be the 7th increase this year.
The daily chart shows that the GBP/CAD pair has been in a strong bearish trend in the past few days. Along the way, the pair moved below the 25-day and 50-day moving averages. It also formed a descending channel that is shown in blue. The current price is at the middle line of the descending channel.
Therefore, the pair will likely continue falling as sellers target the next key support level at 1.4900. A move above 1.5300 will invalidate the bearish view. Find out how to send money to the UK.