Are BOE officials in panic mode or what?!

Things are looking glum for the U.K. economy these days, so I’m looking at this bearish setup on GBP/CAD.

Before moving on, ICYMI, yesterday’s watchlist looked at new potential monthly lows for AUD/NZD. Be sure to check out if it’s still a valid play!

And now for the headlines that rocked the markets in the last trading sessions:

Fresh Market Headlines & Economic Data:

U.S. equity markets close in the red for fourth consecutive session

JP Morgan’s Jamie Dimon: U.S. recession likely 6-9 months from now

Dimon: U.S. stocks to fall by another 20% from now

Australia’s Westpac consumer sentiment retreated by 0.9% after earlier 3.9% gain

Japanese current account deficit narrowed from 0.63T JPY to 0.53T JPY

Australian NAB business confidence index slipped from 10 to 5 in Sept.

RBNZ Governor Orr: Further efforts needed to reduce inflation

Japan’s Economy Watchers Sentiment index improved from 45.5 to 48.4

Japanese PM Kishida: BOJ needs to maintain policy until wages rise

Japanese FM Suzuki: Ready to take steps against excess FX volatility

U.K. claimant count jumped by 25.5K vs. 4.2K forecast

U.K. jobless rate down from 3.6% to 3.5%

U.K. average earnings index popped higher from 5.5% to 6.0% vs. 5.9% forecast

BOE moves to purchase inflation-linked debt to stem collapse in gilts

Upcoming Potential Catalysts on the Forex Economic Calendar:

FOMC member Mester’s speech at 4:00 pm GMT
SNB Chairman Jordan’s speech at 6:00 pm GMT
BOE Governor Bailey’s speech at 6:35 pm GMT

Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️

What to Watch: GBP/CAD

GBP/CAD 1-hour Forex Chart

GBP/CAD 1-hour Forex Chart

It’s all about gloom and doom in the U.K. markets!

Fundamentals are hinting at more downside for the British currency, as the central bank is scrambling to contain the bond market rout and also keep inflation in check.

This bearish correction setup on GBP/CAD looks like it’s just about to play out, as the pair is currently testing the confluence of resistance levels on the hourly time frame.

Price is hovering around the 50% Fibonacci retracement level, which is in line with a short-term falling trend line and a former support zone.

A higher correction could reach the 61.8% Fib that’s closer to the area of interest and the dynamic resistance at the moving averages.

On that note, a bearish SMA crossover is brewing, which might then encourage more sellers to jump in and take GBP/CAD back down to the swing low around 1.5150.

Stochastic is showing that bears are already back in action, as the oscillator has started its descent from the overbought region.

Earlier today, the U.K. reported another jump in unemployment and a stronger than expected pickup in wages, which puts more upside pressure on price levels.

If you’re trading this one, don’t forget to keep tabs on BOE head honcho Bailey’s speech later!