In our last report about the GBP/CAD pair we said that its direction is downward but it might retest the broken channel and decline, in which case we'd sell it. Unfortunately the pair declined directly without retesting the channel and it dropped on Friday due to the Canadian Dollar's strength after the better-than-expected release of the Canadian jobs report.
The pair is trading close to the 61.8% Fibonacci from the rising wave which started last January and is still trading below the downtrend line which supports our negative vision. Although the 61.8% is a corrective level, we can’t buy the pair now or predict a bullish direction, as we need some breaking attempts for this level and a bullish price action candle. This week on July 12 the Bank of Canada (BoC) monetary policy meeting will be the highlight. Central bank rhetoric in the developed economies has now taken a hawkish tone and it is expected that the bank will hike the interest rate to 0.75% from 0.5% which will push the CAD to new highs.
The Next Few Days
From this fundamental and technical analysis of the daily chart we can keep our sell positions with a small volume. If it returns back to rise we can raise the volume and take another sell position, keeping our targets at 1.6490 and 1.6270 in case the pair’s still trading below the trend line. If the prices break the trend line we have to stop the losses and take buy positions.
We have to be careful in the upcoming days regarding hot news like the BOC Overnight Rate and the press conference, in addition to the Average Earnings Index from the UK.
