GBPCAD Correction Creates Opportunities
Canadian CPI yesterday came in better than expected which has created some near term pressure on GBPCAD. However, with UK CPI having seen a record increase over August, BOE tightening expectations have ratcheted higher. In the medium term, there is room for GBP to gain on CAD given that hawkish BOC expectations are already well baked in to price. Essentially, any uptick in BOE tightening expectations will have a more meaningful impact on GBP which will likely be amplified by any further data beats.
Where to Trade Canadian CPI?
The rally off the September lows has seen price capped into a test of the 1.7578 level highs, where price is currently holding. With indicators both bullish, however, and with the retail community more than 75% short, there is plenty of room for a topside break here on any CAD data-weakness, putting 1.7706 in view as the initial target.