GBPCAD might be in for a potential long-term downtrend since a double top has just completed on its daily time frame. Price is now testing the neckline support around 1.9900-2.0000 and a breakdown would confirm this likely drop.
The 100 SMA is above the 200 SMA, which suggests that a bounce might still be possible. Price is also finding support at the 200 SMA, which has held as a dynamic inflection point in the past. A bounce off this area could lead to the formation of another top at the 2.0950 area.
Meanwhile, a downside break could spur losses of around a thousand pips since this is the height of the double top chart formation. With that, a move below 1.9900 could take it down to the next lows at 1.8900, which is close to an area of interest also visible on the long-term chart.
Potential catalysts include the BOE events today, as the UK central bank will announce its monetary policy decision during the London trading session. No actual changes are expected but traders are likely to pay close attention to the accompanying MPC minutes to see if any policymakers shifted their stance.
Also, the BOE Inflation Report is up for release today and this would contain revisions on the central bank’s inflation and growth forecasts, providing more insight on when they might tighten monetary policy. In his recent testimonies, BOE Governor Carney has shared that they have no time line for hiking rates just yet.
As for the Canadian dollar, talks of an OPEC meeting this month could keep risk appetite and oil prices supported, which is good for the correlated Loonie. Any indication that production cuts might be implemented could keep crude oil afloat, which is positive news for Canada’s ailing energy sector.