GBP/CAD is confidently advancing on Friday, after trying hard to break below a strong support level yesterday.
Currently, GBP/CAD is trading at 1.7128, up 0.31% as of 9:50 AM UTC. Thus, the price is departing from the February low touched on Wednesday, when the pair tumbled 0.88%.
GBP/CAD: Britain’s Composite PMI Beat Forecasts
The pound has gained momentum after IHS Markit and CIPS released the preliminary readings of the purchasing managers’ index (PMI). The data showed that UK businesses maintained a bold growth rate this month, as factories saw the fastest increase in output in 10 months. Elsewhere, growth in the dominant services sector slightly slowed in February, but the surprising rebound in manufacturing has offset this decline.
The composite PMI, which merges the services and manufacturing indexes, maintained at 53.3, which is the highest figure since September 2018. Analysts polled by Reuters expected a reading at 52.8.
Tim Moore, associate director at IHS Markit, commented:
“The recent return to growth signalled by the manufacturing and services PMIs provides a clear indication that the UK economy is no longer flat on its back with our GDP nowcast pointing to 0.2% growth through the first quarter of the year.”
The manufacturing PMI advanced to 51.9 in February, from 50.0 in January, which is the highest level since April last year. Analysts expected a decline below the 50 mark, to 49.7. Note that the 50 mark separates growth from contraction. The manufacturing industry has performed well despite concerns that the coronavirus epidemic could hurt production. Moore added:
“Manufacturers noted that abrupt shortages of components from China had reverberated through their supply chains and led to difficulties sourcing critical inputs.
He said that suppliers’ delivery times component noted a record deterioration, suggesting that factories had to wait much longer to get their parts.
The services PMI fell to 53.3 in February, from 53.9 the previous month, while analysts expected a decline to 53.4. Moore explained:
“The latest survey also revealed a solid upturn in the service economy, driven by improving domestic spending and a recovery in new business enquiries since the start of 2020.”