The British pound continues to remain strong against the Indian rupee despite weakening UK consumer sentiment amid Brexit uncertainty.
GBP/INR has advanced 0.08% in early trading on Thursday, trading at 91.588 as of 06:20 AM UTC. The pair has increased since October 28 and is getting closer to the highest level since March.
The pound has consolidated its ascendancy after UK Prime Minister obtained the parliament’s approval to hold elections on December 12.
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Indian Economy Bleeds
The rupee struggles as the Indian economy doesn’t show signs of recovery. GDP growth tumbled to 5% in the previous quarter. This is below normal for what used to be the fastest-growing major economy.
Employment and lending are under pressure as India suffers from the global trade tensions.
Earlier this month, the Reserve Bank of India (RBI) was forced to cut the repo rate from 6.50% to 5.15%.
India’s economy is exposed to trade and depends a lot on how China behaves. Unfortunately, the largest economy in Asia isn’t doing well right now. Earlier today, China released its manufacturing purchasing managers’ index (PMI) data. Factory activity tumbled for the sixth month in a row in October. This added pressure to an economy that is experiencing the weakest growth in about 30 years.
China’s National Bureau of Statistics said that manufacturing PMI fell to 49.3 this month from 49.8 in September. Economists anticipated a flat reading.
However, there is optimism that both India and China will note accelerated GDP growth in the last quarter of this year. A recent report by The Economist Intelligence Unit said it anticipates a weak Q3 growth across G7 and BRICS economies. Although India will be an exception. The report reads:
“Of the G7 and BRICS economies, only India and the UK are expected to post third-quarter results that show an acceleration from the second quarter. In the case of the UK, however, there is limited cause for celebration, as this only represents a recovery from a disastrous second quarter.”
