GBP/INR has continued its downtrend decline on Tuesday but at a slower pace compared to last Friday. The Indian rupee was strengthening its position against the pound. Investors are buying more Indian equities amid increased hope that the US and China will sign an interim trade deal.
The pair has declined by 0.05% so far, trading at 91.132 as of 06:19 AM UTC. However, the rupee is still under pressure amid India’s economic slowdown.
India’s Services Activity Down in October
The pound might try to rebound against the rupee as India just reported disappointing data for its services sector. In October, India’s services industry contracted for the second straight month on weakening demand.
Earlier today, Nikkei and IHS Markit said that India’s services purchasing managers’ index (PMI) increased to 49.2 in October. This was from 48.7 in September, pointing to a worsening contraction. The last time when services activity was below 50 points for two consecutive months was two years ago. This happened after the adoption of a Goods and Services Tax.
The sub-index that monitors demand showed that new business grew only slightly in October.
Recently, India saw a slowdown in its manufacturing sector as well. Consequently, the composite index, which tracks both services and manufacturing industries, tumbled to the lowest level in two years at 49.6. This is further evidence that Asia’s third-largest economy has serious problems to address before the recession gets even more severe.
Pollyanna De Lima, principal economist at IHS Markit, said:
“It’s somewhat worrying to see the Indian service sector stuck in contraction, as firms react to muted demand by lowering business activity. Perhaps even more concerning was the downward revision to future expectations, given the possible detrimental impact of subdued business confidence on investment and jobs.”
Perhaps GBP would have taken the lead by now, but the currency is under pressure itself. The British Retail Consortium (BRC) reported that retail spending rose only 0.6% year-on-year in October. Although it showed a 1.3% increase in the same period last year.
