GBP/CAD is trading slightly lower on Monday. Currently, the pair is fluctuating around 1.7146, down 0.05% as of 10:27 AM UTC.
The pound is under increased pressure after IHS Markit/CIPS manufacturing purchasing managers’ index (PMI) data showed that British factories cut the most jobs since 2012. As for the index itself, it fell to 48.9 in November from 49.6 in October, while analysts anticipated a worse reading at 48.3.
The 50 level divides growth from contraction, and the UK manufacturing PMI has maintained below 50 points for the seventh month in a row amid Brexit uncertainty. The markets are now waiting for the national election scheduled for December 12.
IHS Markit economist Rob Dobson commented:
“November saw UK manufacturers squeezed between a rock and hard place, as the uncertainty created by a further delay to Brexit was accompanied by growing paralysis ahead of the forthcoming general election.”
Last month, UK factories reduced stocks at the fastest rate since June last year while cutting the most jobs since 2012, with the PMI’s employment sub-index dropping to 46.8 from 47.1.
Manufacturing accounts for about 10% of the UK’s gross domestic product (GDP).
Earlier today, the Confederation of British Industry and Make UK cut their forecasts for economic growth and manufacturing growth.
The CBI anticipates GDP growth of 1.3% this year and 1.2% next year, down from previous forecast figures of 1.4% and 1.5%, respectively. In 2021, the industry leader expects acceleration to 1.8% in 2021. The figures consider the best-case scenario in which UK Prime Minister Boris Johnson’s party manages to win the election and handle the Brexit.
Elsewhere, Make UK cut its forecast for manufacturing activity growth for 2020 to 0.3% from 0.6%, while keeping the GDP forecast unchanged at 1.4%.
Make UK CEO Stephen Phipson commented:
“Export orders have increased slightly this quarter, indicating greater confidence from foreign customers about purchasing UK goods as concerns about an end of year no-deal Brexit fade.”
The Loonie is supported by increasing oil prices and renewed US-China trade hopes despite the fact that US President Donald Trump signed the Hong Kong bills. Oil prices are driven by China’s factory activity data that beat forecasts.