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This sterling pair is closing in on a strong support zone ahead of the much-anticipated BOE decision.
Will it bounce or break?
Before moving on, ICYMI, yesterday’s watchlist looked at NZD/JPY gearing up for a correction ahead of the New Zealand GDP report. Make sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
FOMC kept interest rates on hold at 5.50% as expected, dot plot forecasts still project three interest rate cuts later this year
Fed head Powell said that “risks are moving into better balance” and that economy is performing well, but said that job losses aren’t necessary to start easing cycle
BOC Summary of Deliberations hinted at possibility of interest rate cuts in 2024 but policymakers’ opinions on timing differed
ECB official Schnabel says that they are now facing a turning point in real interest rates
New Zealand GDP revealed that economy contracted 0.1% in Q4 2023 vs. estimated 0.1% quarter-on-quarter growth, following 0.3% contraction and putting economy in technical recession
Australian flash manufacturing PMI dipped from 47.8 to 46.8 in March, services PMI climbed from 53.1 to 53.5
Australian employment change jumped 116.5K in February vs. 39.7K consensus, previous reading upgraded to 15.3K gain and jobless rate down from 4.1% to 3.7% vs. 4.0% forecast
Japanese flash manufacturing PMI rose from 47.2 to 48.2 vs. 47.5 forecast, reflecting slower pace of industry contraction
Price Action News
Overlay of USD vs. Major Currencies Chart by TradingView
Dollar weakness was the name of the game in the previous trading sessions, as the general selloff that followed the FOMC decision carried over from New York market hours onto the Asian open.
While the Fed kept rates on hold as expected, the lack of changes in their dot plot forecasts despite upbeat jobs and inflation figures was enough to get bulls scurrying away. Besides, Fed head Powell even mentioned that they’re not exactly waiting for job losses in order to start cutting rates.
The dollar chalked up its steepest and most sustained losses to the Aussie, which was able to get an additional boost from upbeat Australian jobs data. On the flip side, USD/JPY managed to pull slightly higher on currency intervention jitters.
Upcoming Potential Catalysts on the Economic Calendar:
French flash manufacturing and services PMI at 8:00 am GMT
German flash manufacturing and services PMIs at 8:30 am GMT
SNB monetary policy decision at 8:30 am GMT
Eurozone flash manufacturing and services PMIs at 9:00 am GMT
SNB press conference at 9:00 am GMT
U.K. flash manufacturing and services PMIs at 9:30 am GMT
BOE monetary policy decision and MPC minutes at 12:00 pm GMT
U.S. initial jobless claims at 12:30 pm GMT
U.S. flash manufacturing and services PMIs at 1:30 pm GMT
U.S. existing home sales at 2:00 pm GMT
Japan’s national core CPI at 11:30 pm GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! ️
GBP/CAD 15-min Forex Chart by TradingView
Thanks mostly to rising oil prices, GBP/CAD has been able to inch closer to its key support zone around the 1.7220 mark and S1 (1.7230). Now that the BOE is somewhat expected to shift to a less hawkish stance, will we see a break lower to the downside targets at S2 (1.7200) or even S3 (1.7170)?
On the other hand, if bearish CAD vibes return and allow support to hold, the pair might set its sights back on the upside targets at the pivot point level (1.7250) or this week’s highs closer to R1 (1.7280).
Where do you think GBP/CAD is headed today? Leave your thoughts in the comments section below!
