GBP/CAD: Pound Surges as PM Boris Johnson Holds Lead in Polls

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GBP/CAD is edging up on Wednesday as UK polls show that the Conservatives maintain their leading position ahead of the national election scheduled for December 12.

Currently, one British pound buys 1.7327 Canadian dollars, up 0.32% as of 10:24 AM UTC. Thus, the pair updated the highest level since May.

Recently, IHS Markit published UK services purchasing managers index (PMI) data in collaboration with CIPS. While Britain’s services sector tumbled in November, the reading was still better than what most economists expected. The UK’s services PMI dropped last month to 49.3 from October’s 50. Thus, the sector hasn’t seen growth for three months, which is the longest such run since the financial crisis in 2009.

IHS Markit economist Tim Moore commented:

Service providers have attributed the recent soft patch to delayed decision-making on new projects until greater clarity emerges in relation to the domestic political landscape.”

The composite PMI, which merges both the services and manufacturing PMIs, declined to 49.3 in November from 50.0 in October, which is still better than the flash estimate of 48.5.

The PMI reading suggests that the UK’s gross domestic product (GDP) is contracting at a quarterly rate of 0.1%, which represents a smaller decline compared to the 0.2% estimate suggested in November.

The sterling is also driven by the UK polls that anticipate a decent win for Prime Minister Boris Johnson’s Conservative Party. The bets have recently increased that the Tories will hold their lead over Jeremy Corbyn’s Labour Party.

Besides, investors watched closely the US President Donald Trump’s visit to the UK, which went smoothly. Thus, Trump’s visit didn’t undermine Johnson’s favorable position, as some analysts expected.

Ned Rumpeltin, EU head of currency strategy at Toronto-Dominion Bank, commented:

“With just over a week to go, sterling remains highly influenced by the polls day-to-day, but we may also be seeing some relief that Trump did not toss a grenade into the UK political system during his remarks.”

The Loonie might revive on the news that the US and China are moving closer to a phase one agreement. It seems that the US is ready to roll back some tariffs, Bloomberg reported, citing sources familiar with the matter.


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