GBP/CAD has already lost its Friday gains, which were considerable. On Monday, the pair has declined by 0.96%, to 1.7298 as of 10:20 AM UTC. On Friday, the price closed 1.02% higher. Bear now try to eliminate Thursday gains, when the pair surged 0.65%.
GBP/CAD – UK manufacturing up to 50.0 in January from 47.5
While the pound sterling could leverage the positive UK manufacturing data, the currency has been suddenly torn by bears after Prime Minister Boris Johnson made some tough comments that proved he was ready for a hard Brexit.
A few hours ago, IHS Markit and Chartered Institute of Procurement and Supply (CIPS) released the manufacturing purchasing managers’ index (PMI). Thus, the UK manufacturing rose in January to 50.0 from 47.5 in December. Preliminary data earlier this month suggested a reading at 49.8. The 50 mark separates growth from contraction.
IHS Markit said in its statement:
“Reduced levels of political uncertainty following the general election led to mild recoveries in new orders and business confidence and a stabilisation of production volumes.”
The British manufacturing sector started the year on the right foot after maintaining below 50 since May. The industry accounts for 10% of the UK’s gross domestic product (GDP).
New orders increased at the fastest rate since April last year, but export orders continued to weaken.
While Brexit had officially occurred last Friday, the UK and the European Union (EU) have to reach a trade deal by the end of December, and many companies, including those operating in the manufacturing sector, are worried about the potential new format of the relationship.
IHS Markit noted:
“Optimism remained low compared to the historical standards of the survey, in part due to ongoing uncertainty at some firms about the impact of Brexit.”
Sterling is in free fall right now after investors found out that Johnson set out strict conditions for the trade negotiations with the EU. The markets fear that the two sides might fail to reach an agreement by the end of this year.
European leaders warned earlier today that the UK should abide by the rules if it wants to maintain access to the single market.
