GBPCAD: U.K. Inflation Ticks Higher, Canadian Figures Up Next
GBPCAD is moving higher with sterling finding support on higher U.K. inflation figures. The afternoon will see the release of the same data for the Canadian economy.
The U.K. saw higher inflation numbers with the core inflation release coming in at 1.5% versus 1.3%, while the inflation rate was 0.7% against expectations of 0.6%. The rise was attributed to higher clothing and food prices. The inflation numbers for the U.K. are still a long way from the 1.8% seen in January of this year and the modest rise will be of little concern to the Bank of England.
The afternoon sees the release of the same data for the Canadian economy with a dip in core inflation expected from 1% to 0.9%. The inflation rate is expected to also see a dip from 0.5% to 0.4%. With recent central bank actions, Canada has one of the highest interest rates amongst developed nations at 0.25%. If the country starts to see prices falling towards zero then the bank will have to reconsider this stance and the GBPAUD could climb on expectations of a rate cut.
Oil has been climbing on news of a potential vaccine emerging to end the lockdowns and this will provide support for the Canadian dollar, however, the latest inventories are hinting at a build in crude stocks this week so that may weigh on CAD if inflation also slows.
GBPCAD Technical Outlook
GBPCAD rallied through the 1.7300 resistance level on Monday and the pair now has a chance to move higher, with the 1.7500 level being the next taregt. Bullish traders could go long with a stop below yesterday’s low. The Investing Cube team is currently available to help all levels of traders with the Forex Trading Course or one-to-one coaching.