Morning Note: UK Inflation Data, US Retail Sales Loom, BoC Rate Expected to Hold

U.K. Consumer Inflation is Expected to Hold Steady

The U.K.'s inflation rate was 2.8% year-on-year and 0.4% month-on-month in February, with both figures expected to remain unchanged in March. This steady outlook reflects balanced forces: easing goods and energy prices offset by persistent services inflation, suggesting stable underlying price pressures. With no significant shocks anticipated and continuing disinflation trends, inflation is expected to hold steady in the near term. This data is set to be released on 16 April, today at 06:00 GMT.

(GBP/JPY Daily Chart, Source: Trading View)

From a technical analysis perspective, the GBP/JPY currency pair has been in a bearish trend since late October 2024, as evidenced by the formation of lower highs and lower lows within a descending channel. Recently, the pair rebounded from the support zone of 186.40 – 187.00 and is currently retesting the resistance zone of 189.30 – 189.80. If it fails to break above this zone, the bearish momentum could potentially drive the pair back down to retest the support area. Conversely, a solid break above the resistance zone could fuel bullish momentum, pushing the pair higher.

Investors Await U.S. Retail Sales Data

U.S. retail sales rose by 3.1% year-on-year and 0.2% month-on-month in February, with March forecasts pointing to a slower annual increase of 2.6% but a stronger monthly gain of 1.1%. The softer year-on-year figure reflects the fading impact of base effects and moderating consumer spending amid high interest rates. While the sharp expected rebound in monthly sales suggests a pickup in short-term activity, possibly driven by stronger discretionary spending, improved weather conditions, or seasonal factors like early spring promotions. This data is set to be released on 16 April, today at 12:30 GMT.

(U.S Dollar Index Daily Chart, Source: Trading View)

From a technical analysis perspective, the U.S. Dollar Index has been on a bearish trend since early February 2025, as evidenced by a series of lower highs and lower lows. It is currently retesting the support zone between 99.30 and 99.60. If the index finds support and rebounds from this level, it could potentially surge upward to retest the swap zone between 101.30 and 101.60. Conversely, a decisive break below the current support zone may trigger further downside momentum.

BoC Expected to Maintain Interest Rate at 2.75%

The Bank of Canada’s most recent decision kept the benchmark interest rate at 2.75%, and it is widely expected to hold steady at that level in today’s meeting on April 16 at 13:45 GMT. This expectation reflects the central bank’s cautious stance as disinflation trends continue and the economy shows signs of softening. With inflation edging closer to the BoC’s 2% target and growth remaining tepid, policymakers will likely keep rates unchanged while monitoring whether current conditions justify a future policy shift.

(GBP/CAD Daily Chart, Source: Trading View)

From a technical analysis perspective, the GBP/CAD currency pair has been in a bullish trend since mid-January 2025, as indicated by the formation of higher highs and higher lows. Recently, it rebounded from the support zone of 1.8080 – 1.8130 and is currently retesting the swap zone of 1.8450 – 1.8500. A successful breakout above this swap zone could potentially lead the pair higher to retest the resistance area of 1.8680 – 1.8720.