GBP/CAD is surging on Tuesday on a series of positive UK economic data and increased Brexit optimism. The pair has just updated the highest level since May of this year and continues to be bullish.
Currently, one British pound buys 1.7275 Canadian dollars, up 0.37% as of 9:18 AM UTC.
Earlier today, data prepared by IHS Markit and CIPS UK showed that the pace of decline in construction slowed in November, though the sector is still in the contraction territory amid Brexit uncertainty and ahead of the national election scheduled for December 12.
The UK construction purchasing managers’ index (PMI) increased to 45.3 last month from 44.2 in October, the highest level in four months. The reading beat analysts’ forecasts that pointed to a slight increase to 44.5.
The construction PMI continues to fluctuate below the 50 mark that separates growth from contraction for the seventh month in a row. All three sub-sectors – housebuilding, commercial and civil engineering – are currently in decline.
Tim Moore, Economics Associate Director at IHS Markit, commented:
“UK construction output fell again in November as Brexit uncertainty and the forthcoming general election continued to send a chill breeze across the sector.”
Moore said that house building had suffered the least. However, November still marked its most extended decline in 6 years.
The pound has also been driven by retail sales data published yesterday by the British Retail Consortium. Thus, total retail spending adjusted to exclude Black Friday distortions rose 0.9% in annual terms, which is the biggest growth since January 2019.
Besides the positive economic updates, the sterling is pushed by increased Brexit hopes. Just recently, a poll carried out by Kantar showed that UK Prime Minister Boris Johnson’s Conservative Party has expanded its lead over the Labour Party to 12 points. According to the survey, Conservatives got the support of 44% of the respondents, while Labour remained unchanged at 32%.
The Loonie is under pressure as US President Donald Trump surprised everyone by announcing tariffs on imports from Brazil and Argentina, especially on metals. Investors fear that the “Tariff Man” will compromise the potential deal with China.