GBP/CAD could see heightened volatility this week as two key events take center stage: BoE rate decision on Thursday and Canadian employment data on Friday.
A 25bps BoE cut is widely expected as part of its measured easing cycle, but the decision may not be smooth. In May, the MPC vote split a rare three ways, with two members backing a larger cut and two pushing for no change. In June, Deputy Governor Dave Ramsden joined the dovish camp. But with inflation unexpectedly accelerating, some policymakers may reverse course. That raises the odds of a more contentious outcome, potentially sparking a reaction in GBP crosses.
Canadian Dollar, meanwhile, will look the July jobs report for direction. BoC has left rates unchanged for three straight meetings and hinted it may cut only if weakness persists. June’s robust job data — 83.1k positions added and a dip in unemployment to 6.9% — gives the BoC space to stay on hold for longer. A solid print this week would reinforce that view.
Technically, GBP/CAD remains under pressure as decline from 1.8830 continues. Momentum has slowed, as seen in 4H MACD, but there’s no clear sign of a bottom yet. The decline is seen as the third leg of the corrective pattern from 1.8777, and further dip toward 1.7980 cannot be ruled out. On the other hand, firm break above 1.8484 would suggest the fall is over and open a move back toward 1.8830.
