GBPCAD Sells Off AgainThe GBPCAD breakdown trade highlighted recently has triggered with GBPCAD moving through the 1.6293 level support. With GBP under heavy selling pressure over fresh growth fears, the focus now is on a drop down to the target at 1.5899. Recent UK data confirmed the worst consumer confidence in 30 years as UK consumers battle surging inflation, excessive energy prices, and ongoing COVID disruptions. Against this backdrop, many are now fearful that BOE tightening will make near term growth conditions worse, weighing on GBP. At the same, time, the market is more constructive on CAD given the more balanced conditions there. BOC governor Macklem yesterday reaffirmed the need for higher rates in a bid to battle rising inflation.Keep an Eye OnLooking ahead this week, little in the way of key data for either CAD or GBP. With this in mind, focus will remain on risk flows and oil prices movements. The current dip in risk appetite appears to be hampering GBP more meaning that a continuation of current moves should weigh further on GBPCAD near term. Any shift in sentiment, however, might slow down the sell-off.
Source: Tickmill
