In Pega, Cancel is another form of Resolving a case with a different pyStatusWork value. You can use pxForceCaseClose OOTB activity to cancel a case or you can call UpdateStatus activity to update the work status.
It is not advised to update the resolved cases. You can probably explain the business scenario here, and the people here will provide you the necessary support.
One of the options would be to call the UpdateStatus activity and pass the parameter as "Cancelled". You will also need to make sure that the history of the cases is getting updated correctly. You might need to call the History-Add method in your activity.