Preparing for the central bank meetings
Technical Analysis Summary GBP/CAD: Buy
| Indicator | Value | Signal |
| RSI | Buy | |
| MACD | Buy | |
| MA(200) | Neutral | |
| Fractals | Buy | |
| Parabolic SAR | Buy | |
| Bollinger Bands | Neutral |
Chart Analysis
On the daily timeframe, GBPCAD: D1 went up from the rising channel. A number of technical analysis indicators formed signals for further growth. We do not rule out a bullish movement if GBPCAD rises above its most recent high of 1.612. This level can be used as an entry point. Initial risk cap possible below Parabolic signal, latest down fractal and 9-year low: 1.565. After opening a pending order, we move the stop following the Bollinger and Parabolic signals to the next fractal low. Thus, we change the potential profit/loss ratio in our favor. The most cautious traders after making a trade can switch to a four-hour chart and set a stop loss, moving it in the direction of movement. If the price overcomes the stop level (1.565) without activating the order (1.612), it is recommended to delete the order: there are internal changes in the market that were not taken into account.
Fundamental Analysis of -
The Bank of England may continue tightening its monetary policy. Will the GBPCAD quotes continue to rise?
The move up means the strengthening of the British pound against the Canadian dollar. Last week, good data on the labor market came out in Britain. In March, the unemployment rate fell to 3.7%. This is the minimum since 1975 or for 47 years. Simultaneously, inflation soared to a 40-year high of 9% y/y in April. Against this background, the weekly growth of the GBPUSD was the highest since December 2020. Recall that the increase in UK GDP in the 1st quarter of 2022 amounted to an impressive 8.7% y/y. Theoretically, the Bank of England may raise the rate (1%) at the meeting on June 16 in order to reduce inflation, as the British economy is developing quite actively. In turn, Canada Gross Domestic Product for the 1st quarter of 2022 will be released on May 31. It is forecast to decline to 5.7% y/y from 6.7% y/y in Q4 2021. If the GDP data is weak, then this may limit the determination of the Bank of Canada to raise the rate (also 1% as in Britain) at the June 1 meeting. Note that no significant statistics are expected to be published this week in Britain, while Retail Sales for March will be released in Canada on May 26.