UK employment and Canada CPI data are the major focuses for today. BoE is clearly looking into economic data to assess how persistent inflation pressure remains. Another 25bps hike in May is still likely but that would depend on today’s job data, in particular on wages growth, as well as tomorrow’s CPI report.
Meanwhile, BoC is clear that an accumulation of evidence is needed before consideration of resumption of tightening. Today’s CPI data might not be a determining factor on any near term move in BoC’s policy. Yet, they still crucial for BoC to decide whether another hike is needed later in the year.
Technically, GBP/CAD’s pull back from 1.6863 short term top extended lower this week. It’s now pressure 55 D EMA (now at 1.6659). Strong rebound from current level will retain the case that it’s merely in a near term correction. That is, another rise through 1.6863 should be seen sooner rather than later.
However, sustained break of the EMA will argue that GBP/CAD is already in correction to whole up trend from 1.4069. That would open up deeper fall through 1.6075 support, possibly to 1.5811 cluster support (38.2% retracement of 1.5069 to 1.6863 at 1.5796) before forming a base.
