Global macro overview for 26/05/2016:
The Bank of Canada has decided to keep the overnight rate unchanged at the level of 0.5%. Moreover, the bank rate remained at 0.75% and the deposit rate at 0.25%. In the BoC statement, the greatest emphasis has been put on the recent wildfire consequences, bringing a lot of disruption and temporarily holding back oil production. According to the Bank of Canada forecast, the economic damage caused by the wildfires will cut around 1.25 % points from the real GDP growth in the second quarter of 2016. Moreover, the recent downward revision to 1% from 2.2% in April makes the strong start of the year to look worse than expected.
Let's now take a look at the GBP/CAD technical picture in the daily time frame. Since the top at the level of 2.0975, bears were in control over the market. The series of lower lows and lower highs supports this view, but the recent high at the level of 1.9305 might be the first higher high in the downtrend. Nevertheless, the market is still trading below the 200 and 100 moving average and it look like the bears might want to put on test the level of 1.8744 before any meaningful rally occurs again.
