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EUR/GBP rises ahead of the BoE rate decision. USD/CAD pares yesterday’s Fed-inspired losses, looks to OPEC+.

EUR/GBP rises ahead of BoE rate decision

EURGBP is rising despite weak German factory orders and as attention turns to the BoE interest rate decision.

German factory orders fell -4.7% MoM after falling -0.8% in February and well below forecasts of -1.1%. The data highlights the impact of the Ukraine war and China’s COVID lockdowns on the German economy and, more broadly, the European economy.

The BoE is expected to raise interest rates by 25 basis points to take the lending rate to 1%. This would mark the fourth straight meeting of hikes and comes amid concerns that the UK economy is heading towards a recession. Will there be more than one dissenter this time? Will the BoE look to start active selling of gilts, and will it make the BoE sound cautious over the UK economic outlook. These are the questions that direct where the pound goes from here.
 

Where next for EUR/GBP?

EURGBP has rebounded off its April 14 low of 0.8250, re-capturing the 50 and 100 sma as it heads towards resistance at 0.8467, the April high. The RSI is supportive of further upside.

Buyers will need a break over 0.8467 to continue the bullish trend towards the 0.8512 2022 high.

Sellers will look for a move below 0.84 to expose the 100 sma at 0.8375, with a move below here negating the near-term uptrend and opening the door to support at 0.83.

(Click on image to enlarge)

USD/CAD pares yesterday’s Fed inspired losses, looks to OPEC+

USD/CAD fell 0.86% yesterday after the Fed raised interest rates by 0.5% and started QT as expected. However, Fed Powell also calmed fears that the Fed would get more hawkish, saying that a 75 bp hike was unlikely and that 50bp point hikes were likely in the upcoming meetings.

Meanwhile, the loonie also traced oil prices higher. Oil jumped 5% after the EU unveiled plans to phase in a Russian oil embargo by the end of the year.

Today the pair is rising as attention turns to OPEC+. The oil cartel is meeting and is unlikely to deviate from its previously agreed 430k bpd increase for June, which could help keep oil prices moving towards $110.

US jobless claims are expected to rise slightly to 182k, indicating a strong jobs market ahead of tomorrow’s NFP.
 

Where next for USD/CAD?

USDCAD ran into resistance at 1.2910 and has fallen for three straight sessions. However, the chart still shows multiple bullish signals.

The pair continues to trade above its multi-month rising trendline, the 20 sma has crossed above the 50 sma, the RSI remains in bullish territory, and the long lower wick on today’s candle suggests little acceptance at the lower price.

Buyers will look for a move over 1.28 to bring 1.2910 back into focus and aim for fresh year-to-date highs.

Meanwhile, a move below today’s low of 1.2710 exposes the 20 sma at 1.27 and the rising trendline support at 1.2670. A move below here could see sellers gain traction.

(Click on image to enlarge)