Question

Why does a magnetic compass needle pointing North and South in the absence of a nearby magnet get deflected when a bar magnet or a current carrying loop is brought near it. 

Answer 1

In the absence of an external magnetic field, only Earth’s magnetic field acts due to which magnetic compass needle points north and south direction.

Current carrying loops behave like bar magnets and both have their associated lines of field. This modifies the already existing earth’s magnetic field and a deflection results.