GBP/CAD continues to slide on Thursday. Currently, the pair is trading at 1.7156, down 0.36% as of 11:05 AM UTC.
The sterling has been under increased pressure after IHS Markit released the UK manufacturing purchasing managers’ index (PMI) for December. The indicator showed that the factory output declined last month at the fastest pace since 2012 amid Brexit uncertainty.
The manufacturing PMI fell to 47.5 in December from 48.9 in November. The latter was revised up from a preliminary figure of 47.4. Analysts expected a decline to 47.6 for December. The 50 mark separates expansion from contraction.
The output sub-index fell last month to 45.6 from 49.1 in November, the lowest level since July 2012.
IHS Markit economist Rob Dobson commented:
“With demand weak and confidence remaining subdued, input purchasing was pared back sharply and jobs were cut for the ninth successive month.”
The survey was conducted between December 5 and 18. On December 12, the UK held the early election in which Prime Minister Boris Johnson’s Conservative Party surprisingly secured a large majority. This allows him to take full control over the Brexit progress.
The UK is about to leave the European bloc on January 31, with another deadline for the transition deal being set for the end of 2020. The tight timeline for the transition period gives the PM a short window to reach consensus with European leaders, though he ruled out any extension attempt. Some economists fear that Johnson’s amendment to the Withdrawal Agreement Bill (WAB) might lead to a no-deal Brexit.
The PMI’s sub-index of new orders maintained below the 50 mark for the eight month in a row and close to its lowest in seven years.
IHS Markit said that investment demand was weak last month, though there was stronger demand for consumer goods. Dobson added:
“On this basis, it looks like UK manufacturing and the broader economy may both start the new decade as they began the last, too reliant on consumer spending and still waiting for a sustained improvement in investment levels.”
