GBP/INR is trading almost flat early on Tuesday as the Indian markets are closed in observance of the Guru Nanak Jayanti holiday. The price is up 0.02% to 92.001 as of 6:01 AM UTC. Yesterday, the pair surged from 91.157 to a high of 92.269.
Nevertheless, it couldn’t break a strong resistance line at that level and continues to move inside a sideways chancel that started to shape in mid-October.
India’s Economy Likely to Decelerate
India is about to release data on growth in its gross domestic product (GDP) on November 29, but the outlook is not optimistic at all. Given the industrial production in the three months to September contracted 0.4% after a 3% surge in the previous three months, India’s economic growth is likely to decelerate to below 5% in the second quarter that ended September.
Besides industrial production, other economic data also showed weaker-than-expected performance, including private consumption, exports, and investments.
Japanese Nomura predicts the Q2 GDP growth to contract to 4.2% from 5% in the first quarter of the fiscal year 2020. Last week, the brokerage firm cut India’s economic growth forecast for the fiscal year 2020 to 4.9% from 5.7%, the lowest figure among forecasting agencies.
Elsewhere, SBI bank said in its Ecowrap report that it didn’t expect any growth acceleration in the second quarter. The document reads:
“Out of 26 indicators, only 5 indicators were showing acceleration in September. This indicates the demand slowdown in the economy is still significant and would take longer time to recover. If we map the leading indicators showing acceleration, there is a distinct possibility that growth in GDP in Q2 will be lower than 5%.”
Last week, we reported that rating agency Moody’s also downgraded India’s rating outlook from “stable” to “negative.”
This is in contrast with the UK’s economy, which managed to avoid a recession, accelerated by 0.3% in the third quarter.
Nevertheless, the pound might still be under pressure as markets are still hopeful of a trade deal between the US and China. US President Donald Trump is about to give a speech at the Economic Club of New York, touching upon the country’s trade policy.