GBP/CAD: Sterling Declines on Weak Labor Market Data

GBP/CAD started the Friday session with some hints to continue the rally, but the pair recently crashed, losing 0.17% as of 10:40 AM UTC. Currently, one British pound buys 1.7300 Canadian dollars.

GBP is under pressure after a report prepared by the Recruitment and Employment Confederation (REC) and accounting firm KPMG showed that the employers’ demand for staff decelerated last month by the most in over a decade.

The survey is relevant given that the Bank of England (BoE) is watching the labor market very closely. Last month, two members of the central bank’s Monetary Policy Committee (MPC) voted in favor of an interest rate cut, citing the weakening labor market. The two votes came in spite of analysts’ expectations of a unanimous decision to hold the rates.

The index of demand for staff declined to 51.4 in November, from 51.6 in October, which is the lowest since September 2009.

KPMG vice chair James Stewart explained:

“The uncertainty around the upcoming election and Brexit outcomes are playing havoc with the UK jobs market, as clearly employers and job-seekers are taking a wait-and-see approach before committing to growth or movement.”

The Loonie attempts to take the lead amid slight hopes for an interim trade deal between China and the US. Canada is an export-oriented economy, so any positive news about the trade talks bode well for the local dollar.

Earlier today, China said that it would cut the tariffs on US pork and soybeans, trying to get a similar response for the US. China insisted that the US had to rollback tariffs in order for the phase one deal to succeed. On December 15, Washington is set to introduce a 15% tariff on US$160 billion worth of goods imported from China.

The sterling is trying to regain control after mortgage lender Halifax reported that the UK house prices increased last month at the fastest annual rate in seven months. Thus, house prices rose 2.1% in annual terms after a 0.9% rise in October.

Halifax managing director Russell Galley commented:

“While a degree of uncertainty remains evident, it’s also clear that buyers and sellers are responding to factors such as improved mortgage affordability and the limited supply of available properties.”

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