FX.co ★ GBP/USD expected to extend gains and USD/CAD to decline

Investors' sentiment improved on Tuesday ahead of the release of corporate earnings reports by some of the largest US and EU companies. The NASDAQ and the S&P 500 tumbled and then retraced upward amid China's disappointing data, showing a noticeable slowdown in economic growth.

Markets expect positive earnings reports from companies. That is why the situation that developed in the market in the previous week may repeat again and rising demand for companies' shares may boost stock indices. Trading in the Asian market confirms this assumption. On average, China's major stock indices are growing by about 1%. In Europe, trading is expected to start in positive territory as well.

Today, the oil market is retracing upward after yesterday's correction caused by a disagreement between OPEC+ and Russia on raising production. The quotes will most likely attempt to test the swing lows reached earlier.

In the forex market, the greenback is facing tremendous pressure versus all currencies amid expectations of an increase in demand for shares of companies and positive earnings reports.

What to expect from the market today and throughout the week?

The scenario of the previous week may also unfold this week. Back then, the market ignored disappointing inflation results in the US and focused on corporate earnings reports that boosted shares and led to a weaker US dollar.

Speaking of the British pound, it may receive support in the wake of heightened expectations of an increase in interest rates in the United Kingdom. On Sunday, Bank of England Governor Andrew Bailey made it clear in an interview that the regulator would have to act if inflation accelerated. Such a possibility does exist.

Bullish market sentiment is expected to support demand for shares, exert pressure on the US dollar, and boost prices on commodities and raw materials.

Daily outlook:

GBP/USD is testing the level of 1.3770. In case of a breakout, the quote is likely to rise to 1.3845.

USD/CAD is traded at 1.2330. If the price falls below this level, the pair may go down to the targets of 1.2300 and 1.2250. Rising oil prices are the main reason for a stronger loonie, as well as expectations of an increase in inflationary pressure in Canada, which may urge the country's central bank to consider the possibility of raising interest rates.