The Bank of England set the tone for the rest of the week today as Mark Carney and the governors of the BoE announced a cut in the interest rate from 0.50% to 0.25% in an effort to be proactive at protecting the UK economy from the shocks of the Brexit. This movement seems counter intuitive to the general actions of Central Banks which tend to be reactive when it comes to economic shocks and collect the data before hand. In this case only 3 board members voted to wait and see and the vote to cut was implemented. On top of this, further quantitative easing was announced for the economy and it’s expected that within the coming months this will likely be pumped in to bolster the credit sector and support lenders and creditors.

However, many are also pointing out sharp facts that with the uncertainty at hand for the next two years and the large drop in CAPEX, we may instead see an economy struggling and the BoE looking like it pull the trigger a little too early. Growth forecasts have also been downgraded by the Bank of England and Fitch from the previous forecasts of roughly 2% down to now 0.8-0.9%. This represents some large changes from previously and many are anticipating further falls if the economic shocks continue in the long run.

For the GBPUSD this left the market looking for further falls and fall it did on the announcement of a rate cut. The GBPUSD had previously struggled to break through the resistance band at 1.3340 and it seemed all the more likely that it would struggle given the market consensus has been bearish ever since the Brexit. In this case selling of news is becoming more main stream for the UK as bad news is likely to carry on for some more time, but the bears are looking in control and a push down to support at 1.3090 has so far caused a pause in any further movements. I anticipate we will see further falls here to 1.2939 and 1.2795 accordingly as the market looks to drift lower in the wake of recent events.

Canadian dollar traders have fought back in recent days after the oil market has looked to rebound after testing support levels around the $40.00 a barrel mark. This bottoming of the market is still looking a little shaky and could be a case of profit taking but so far the market has been receptive and the USDCAD has fallen accordingly to touch support at 1.3017, further falls to 1.2905 also seem likely if we see further spikes in the oil. On top of this all though we also have the upcoming Canadian economic data on the employment change and trade balance, all of which will be big movers and be shortly followed up by non-farm payroll from the US. As a result the USDCAD is likely to be a big mover in the coming hours and one to watch.