GBP/CAD Sellers Regain Control Ahead of Bank of England Decision
Market Overview
The British pound (GBP) faces renewed selling pressure against the Canadian dollar (CAD) as investors prepare for the Bank of England’s (BoE) policy decision. Despite GBP’s recent strength against major counterparts, including the euro and US dollar, expectations of a rate cut have triggered concerns about the currency’s stability.
Markets anticipate that the BoE will lower rates by 25 basis points to 4.5%, with a growing consensus among policymakers supporting an accelerated pace of monetary easing. The potential for a dovish tone from Governor Andrew Bailey has raised fears that the GBP recovery could stall, allowing sellers to take control of GBP/CAD after two weeks of gains.
Meanwhile, the Canadian dollar remains relatively stable, supported by oil prices and a strong labor market, providing additional downside pressure on the currency pair.
Technical Analysis
Trend and Momentum Outlook
On the four-hour chart, GBP/CAD has shifted into a bearish formation, following the break of an ascending trendline. The pair is now retesting the broken support at 1.79110, which has turned into a resistance level. If sellers maintain dominance, GBP/CAD is likely to decline toward the next support at 1.78432. A break below this level would confirm further downside, targeting 1.77569 and 1.76616.
RSI remains below 50, reinforcing bearish sentiment, while MACD hovers around zero, indicating the need for stronger selling momentum to sustain the downtrend.
If GBP buyers reclaim 1.79110, a potential rebound toward 1.80063 could emerge. However, only a sustained move above 1.81604 would invalidate the current bearish scenario.
Key Technical Levels
- Resistance Levels: 1.79110, 1.80063, 1.81604
- Support Levels: 1.78432, 1.77569, 1.76616
Fundamental Factors Driving GBP/CAD
The BoE’s policy meeting is the highlight of the trading session, with investors fully pricing in a rate cut. The focus, however, will be on Governor Andrew Bailey’s post-meeting commentary, which could shape expectations for future monetary policy adjustments. If Bailey signals a more aggressive rate-cut cycle, GBP could extend losses as traders anticipate further easing. On the other hand, a cautious stance regarding inflation risks might limit the downside and support a mild recovery in GBP/CAD.
Economic Data in Focus
In addition to the BoE decision, GBP traders are closely watching the UK Construction PMI, which is expected to improve slightly while remaining above the expansion threshold of 50. A strong reading could offer temporary support to the pound. Meanwhile, Canada’s economic calendar remains light, leaving the CAD’s performance closely tied to oil prices and broader risk sentiment.
Conclusion
GBP/CAD remains under pressure as investors brace for BoE’s rate decision and guidance on future cuts. A break below 1.78432 would confirm further downside, while a recovery beyond 1.79110 could delay further declines. The policy outlook from Governor Bailey remains the primary driver of GBP’s next move.
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