GBP/CAD is trading flat on Thursday, with a slight hint to a downward trend, especially after US and China just agreed to give up tariffs in several phases, which bodes well for the trade-reliant Canadian economy.
Currently, one British pound buys 1.6934 Canadian dollars, down 0.6% as of 10:16 AM UTC.
Yesterday, the GBP was slightly up after Canada posted disappointing performance of its Ivey Purchasing Managers Index (PMI). However, the pound is also under pressure ahead of the election and amid a slowdown in housing prices.
Canadian Purchasing Activity Contracts
In October, the purchasing activity in Canada slowed down for the second straight month, falling to its lowest level in over four years. Yesterday, Ivey PMI data showed that the index declined to 48.2 from 48.7 in September (seasonally adjusted).
The Ivey PMI is an indicator in economic activity based on a group of purchasing manager from across the country. Any figure below 50 suggests a contraction in activity.
The employment sub-index declined last month to 47.2 from 49.6 in September, while the supplier deliveries tumbled to 45.1 from 50.2.
UK House Prices Slow Down
Earlier today, mortgage lender Halifax said that British house prices increased at their slowest annual rate in more than six years, which demonstrates the negative effect of the ongoing Brexit uncertainty.
Last month, the indicator rose 0.9% after declining by 0.1% in September. For comparison, right before the Brexit referendum in 2016, UK house prices were increasing by 8-9% a year according to Halifax’s measure.
The lender’s managing director Russell Galley explained that consumers were “erring on the side of caution” despite the low interest rates and wage growth. He added:
“We remain unchanged from our view that activity levels and price growth will remain subdued while the UK navigates political and economic uncertainty.”
GBP/CAD Waiting for More Clues
The pair has shown no clear direction since Tuesday, but it can get more volatile after the Bank of England releases its interest rate decision and updated economic outlook. The central bank’s Monetary Policy Committee is due to meet in a few minutes.
Elsewhere, the Canadian dollar can benefit from increased trade optimism after the US and China confirmed a trade deal.