The GBP/CAD currency pair weakened on Wednesday, while holding not far from recent three-week low, after data showed the UK economy had contracted 0.3% in October from September, confounding market expectations of zero growth.

The GDP contraction was mostly driven by the services sector, which shrank 0.2% month-over-month. Within services, the largest drop was observed in information and communication, 1.7%.

Additionally, output in consumer-facing services went down 0.1% in October.

Meanwhile, industrial production in the country contracted at a much sharper than expected monthly rate in October, 0.8%, mostly driven by declines in manufacturing output (-1.1%) and electricity and gas (-1.8%).

And, construction output shrank 0.5% month-over-month.

According to data by the Office for National Statistics, the economy stalled in the three months to October, registering the same performance as in the three months to September.

The Canadian Dollar reversed a 0.2% loss against the Sterling, which it recorded on Tuesday, as oil prices plunged to 5 1/2-month low.

In addition, market players mulled prospects that the Bank of Canada might be among the first major central banks to cut interest rates in the upcoming months. A rate cut is now expected as early as April 2024.

As of 7:54 GMT on Wednesday GBP/CAD was edging down 0.23% on the day to trade at 1.7027. Last week, the minor Forex pair went down as low as 1.7006. The latter has been the pair’s weakest level since November 16th (1.6956).

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