In the Core rulebook for WFRP 2nd Edition there is a note in the Navigator Career (page 78) that says "since there are no compasses in the world, all ships employ a skilled navigator".
I remember hearing at some point that this was due to the Northern Chaos Wastes in some way, but I can't find it in the rule book. Is there an in-universe explanation for the lack of compasses, and if so, where can I find it?
That information only appears on the 2nd edition rulebook, under the navigator career, and nowhere else. Ironically, on the 1st edition rulebook, the compass was listed as one of navigator trappings (pg 102):
The Navigator is a vital member of a ship's crew, responsible for charting and setting courses and making sure that the ship is where it should be and headed in the right direction. Navigators can set a course by the stars, by the sun, or by using charts. Their navigational skills are equally useful on land and Navigators may sometimes be employed by expeditions or merchant ventures going into unknown territory.
Trappings: Navigator's instruments (compass, sextant, etc.), 2D6 maps and charts, Hand Weapon, Mail Shirt
But again, that is the only mention of a compass in the book, and is probably talking about the other compass, a tool used to draw. However, they do mention compasses as references here and there, but not the actual item, like:
Four main gates allow pedestrians and horsemen into the city, one at each of the compass points.
Or even as the name of an inn:
The player characters start the adventure at the Shattered Compass, an inn near the waterfront in L’Anguille.
There are magical compasses in the setting that point at different things, like the Compass of Meteoric Silver:
Leonardo has a special compass with a direction arrow made from meteoric silver. This will point to the greatest concentration of magic on the battlefield.
But considering they say it's a special compass, maybe there are not-so-special compasses too. Regardless, it seems that there are no compasses in Warhammer Fantasy setting due to omission, and not because of some mysterious force.
My search encompassed (and they love using that word) the following books, in no particular order, I went back and forth looking under different terms: 1st and 2ed edition core rulebooks, Fantasy Companion, Career Compendium, Tome of Corruption, Tome of Salvation, Karak Azgal, Barony of the Damned, Old World Bestiary, Old World Armory, Realms of Sorcery, Realm of the Ice Queen, The Thousand Throne, Plundered Vaults, Shades of the Empire, Renegade Crowns, Lure of the Lich Lord, Night's Dark Masters, Terror in Talabheim, Knights of the Grail, and I could be forgetting another book, but that was mostly it.
This is general lore coupled with some interpretations: I have not read the Warhammer Fantasy RPG book (I'm much more of a 40K guy myself).
The Warp/Realm of Chaos periodically floods the Material Realm with Magic, which gets redirected by the Waystones and fed into the Great Vortex, which drains it from the Material Realm. However, when the Material Realm does get flooded, Daemons start spawning in places, and sometimes the regular laws of physics don't necessarily apply.
Because general rules like Magnetism don't always work, a compass could never be reliably developed because Magic would always be messing it up. It would work sometimes, but never reliably enough to ever be accepted as a legitimate tool, and a Navigator would be an overall more reliable source of information.
It is generally accepted that compasses are either non-existent or not widespread. While I don't recall any official explanation for this, the Chaos Waster themselves could serve as one.
The area is described in most sources as one, where the rules of time and space don't apply as in the regular world (for example see the novel Daemonslayer, where a dwarfhold overran by the Wastes only experienced 20 years, while in the outside world it was 200). The Wastes are also famous for their cities and ruins appearing out of nowhere, armies who subside on nothing and fight forever, and all matters of strange, otherworldly phenomena.
The rules of time and space bend to Chaos in the north; it is not a great leap to think that the rules of magnetism are just as malleable. Or simply as distance and places are not constant in the Wastes - the actual place of the magnetic pole (if it even exists) can wander compared to fixed position in outside the Wastes. These would make any traditional compass quite unreliable.
