GBP/INR continues the rally that took off on October 28. Currently, one British pound buys 91.915 Indian rupees, 0.08% more than yesterday’s close price, as of 06.13 AM UTC.
The pair is currently trading inside a bullish channel. It couldn’t break the support line earlier today, which would have opened the door to a trend reversal.
The Rupee looks weaker on disappointing data from India’s manufacturing sector.
India’s Factory Activity Slows in October
A few hours ago, research firm IHS Markit released its Nikkei Manufacturing Purchasing Managers’ Index (PMI). According to the report, India’s manufacturing sector saw its slowest growth in two years. The indicator fell to 50.6 in October from 51.4 in September.
A result above 50 points suggests expansion, with higher results pointing to stronger expansion during a given month. Any figure below 50 points indicates contraction.
The slowing manufacturing conditions coincide with India’s economic slowdown in general. In October, both factory orders and production has grown at the weakest pace since 2017. Consequently, job creation declined to the lowest level in six months, with businesses hesitated to hold excess stock and reduced input buying.
Business confidence fell to the lowest level in over 30 months, the statement says. Elsewhere, input costs dropped for the first time in more than four years.
Pollyanna de Lima, principal economist at IHS Markit, commented:
“Weakening demand had a domino effect in the manufacturing industry, knocking down rates of increase in production, employment and business sentiment. With quantities of purchases contracting for the third month in a row, input costs fell for the first time in over four years during October.”
The disappointing IHS Markit report came a day after the Indian government released its Infrastructure Output data. The indicator surprisingly tumbled by 5.2% in September compared to the same period in 2018. This represents the largest decline in 14 years.
Infrastructure output comprises eight sectors, including coal, crude oil, electricity, and cement. It accounts for about 40% of India’s industrial output.