GBP/CAD is a pair to watch today with inflation data from the UK and Canada featured. The cross tried to resume the rise from 1.4069 this week, and breached 1.5811 resistance. Yet, there is no clear follow through buying so far.
Looking at the bigger picture, it’s now pressing an important resistance at 1.5875 (2019 low). 55 week EMA (now at 1.6012) is also in proximity. Rejection by this resistance zone, followed by break of 1.5167 support, will keep medium term outlook neutral-to-bearish.
However, sustained break of the resistance will solidify the case of bullish trend reversal. Further break of 61.8% projection of 1.4069 to 21.5811 from 1.5167 at 1.6244 will likely prompt upside acceleration to 100% projection at 1.6909.
UK CPI accelerated further to 11.1% yoy in Oct despite energy price guarantee
UK CPI accelerated from 10.1% yoy to 11.1% yoy in October, above expectation of 10.6% yoy. That’s highest level since 1981 based on modelled data. Core CPI was unchanged at 6.5% yoy, above expectation of 6.4% yoy.
ONS said, “Despite the introduction of the government’s Energy Price Guarantee, gas and electricity prices made the largest upward contribution to the change in both the CPIH and CPI annual inflation rates between September and October 2022.”
“Rising food prices also made a large upward contribution to change with transport (principally motor fuels and second-hand car prices) making the largest, partially offsetting, downward contribution to the change in the rates.”
Also released, PPI input came in at 0.6% mom, 19.2% yoy, versus expectation of 1.0% mom, 17.7% yoy. PPI output was at 0.3% mom, 14.8% yoy, versus expectation of 0.0% mom, 14.8% yoy. PPI core output was at 0.5% mom, 13.3% yoy, versus expectation of 1.3% mom, 14.0% yoy.
Full CPI release here.