The shortlived price stability witnessed in the GBP/CAD currency pair has been overtaken by a downward spiral after the release unsettling Purchasing Managers Index (PMI) data in the UK.
The British PMI reported for March was 34.5 which represents a huge decline from February’s PMI which was reported at 53.2. That decline is the sharpest PMI decline that has ever been recorded. The data for the dominant services industry was reported at 35.7, demonstrating a sharp decline.
If the unappealing PMI data is used as a tool for predicting the Gross Domestic Product (GDP) figures that Britain will report especially for March, then the GDP will be the worst that has been seen in years. The negative performance is largely attributed to the impact of the coronavirus on the economy. The effect has been quite disruptive and has even been felt in the forex markets. The GBP/CAD’s latest performance is a good example.
The GBP/CAD price performance took a huge hit after the release of the UK PMI data. The currency pair had some bullish performance ahead of the release, with the price surging on Thursday morning from 1.7479. The bulls rallied, pushing the price to the day’s high at 1.7693 before a sharp pullback took place, pushing down the price to the day’s low at 1.7451. There were some retracements here and there but the price attempted to stabilize on Friday morning after opening at 1.7509.
At around 0800 hrs GMT, the price of the GBP/CAD currency pair started to experience a more bearish momentum which saw the price drop from the day’s high at 1.7556 to the day’s low at 1.7268 at the tie of this press. The performance is largely attributed to the negative PMI data which generally means that the UK’s economy has been heavily affected by the coronavirus pandemic. Across the world, many economies are also feeling the heat and governments have been rushing to implement monetary policy measures that would help support their economies in these trying times.