GBP/CAD Falls Below 1.7000 for First Time Since Jan 21

GBP/CAD is tumbling on Monday amid the coronavirus panic.

Currently, GBP/CAD is trading at 1.7060, down 0.94% as of 9:48 AM UTC. The price touched a daily low just below 1.7000, which coincides with the lowest level since January 21.

GBP/CAD: Rate Cut Talks Drag Sterling Down

The pound is starting to shake after investors priced in an imminent interest rate cut from the Bank of England (BoE). The central bank said earlier today that it was working with the UK’s finance ministry and central banks from other countries to ensure “all necessary steps are taken” to address the coronavirus impact on the economy.

The BoE said in a statement:

“The Bank continues to monitor developments and is assessing its potential impacts on the global and UK economies and financial systems.”

The sterling crashed to the lowest since mid-January also because the British manufacturing sector is showing signs of weakness as a result of the coronavirus effect. IHS Markit said a few hours ago that the UK’s manufacturing purchasing managers’ index (PMI) increased last month to 51.7 from 50.0 in January, while investors expected growth to 51.8. The flash reading released at the beginning of February anticipated an increase to 51.9.

Factories recorded a surge in delays in their supply chains, according to the survey.

Nevertheless, new orders increased at the fastest pace in 11 months, while business optimism rose to a nine-month peak, as some of the Brexit uncertainty was lifted when PM Boris Johnson won a major victory in the December election.

Rob Dobson of IHS Markit commented:

“Supply-chain disruptions were emerging rapidly as the COVID-19 outbreak led to a substantial lengthening of supplier lead times, raw material shortages, reduced inventories of inputs, rising input costs and reduced export orders from Asia and China in particular.”

Initially, the pound fell below 1.7000 against the Loonie, but positive housing market data helped it recover some of the losses. The BoE said that lenders had approved the highest number of mortgages in about four years in January. Banks green-lighted 70,888 mortgages in the first month of the year, up from 67,930 in December.

Consumer confidence bounced back to an 18-month peak, while businesses are more optimistic since Johnson took control over the government.

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