GBP/CAD – UK Inflation At 9-Year High

#OPINIONLEADER# #Signal#

 SEP 15, 2021

• Ascending Triangle pattern in GBP/CAD (H4)
• Potential upside on GBP/CAD

Chart 1: GBP/CAD H4 chart

Earlier today, the UK Office of National Statistics (ONS) reported that annual inflation in August hit a 9-year high level. The 1.2% rise in August alone was the highest figure ever recorded. The ONS also highlighted that the main driver behind this rise in prices is a base effect. Specifically, the Eat Out to Help Out scheme that was implemented in the UK last year led to a decline in restaurant meals in August 2020. As a result, prices will be subjected to a higher rise when recovering.

At the moment, the forming of an Ascending Triangle pattern is close to completion in GBP/CAD (H4). The upcoming Canadian CPI data release is expected to perform poorly as compared to the previous month. If the released data is worse than or as forecasted, the Canadian dollar may weaken, potentially sending GBP/CAD upwards to break above the Ascending Triangle.

Trade Setup for GBP/CAD (H4)

Buy Stop at 1.7630

Upcoming major news that may impact price movement of GBP/CAD

15 September – Canadian CPI m/m data release at 2030 (GMT+8)

17 September – UK Retail Sales m/m data release at 1400 (GMT+8)

17 September – Bank of England Consumer Inflation Expectation data release at 1630 (GMT+8)

20 September – Canadian Federal Election

22 September – UK Flash PMI data release at 1630 (GMT+8)

23 September – Bank of England monetary policy announcement at 1900 (GMT+8)