GBP/INR is advancing on Tuesday, trying to recover the losses incurred at the end of last week. Currently, the pair is trading at 92.610, up 0.22% as of 6:00 AM UTC.

The rupee has weakened after the International Monetary Fund (IMF) cut its outlook on India’s economic growth for the fiscal year 2019 to 4.8% from 6.1% predicted in October last year. In its World Economic Outlook (WEO) Update, the IMF cites a slowdown in local demand and concerns in the non-bank financial sector.

The sharp reduction in India’s outlook has dragged down the IMF’s prediction on the global economy, which is now expected to have expanded 2.9% in 2019 compared to 3.0%.

The fund slashed India’s 2020 GDP growth forecast to 5.8%, down 0.9% from the previous prediction. For 2021, the outlook is 6.5%. The report said:

“In the third quarter of 2019, growth across emerging market economies (including India, Mexico, and South Africa) was weaker than expected at the time of the October WEO, largely due to country-specific shocks weighing on domestic demand,” the IMF said.

The rupee has been under increased pressure after the India Primary Consumer Sentiment Index (PCSI) tumbled 7.3% in January. The indicator is released by Thomson Reuters in collaboration with Ipsos.

Amit Adarkar, India CEO at Ipsos, commented:

“Inflation and prices of essential commodities have been going up due to the US-Iran standoff and uncertainty around the US-China trade war. It has jacked up oil prices and the cost of living. Also around this time, IT planning is a strain on incomes. Additionally, global slowdown has impacted India’s economic growth as well, as economies are becoming increasingly interdependent.”

Elsewhere, British households have become more confident about their finances. Data firm IHS Markit said that the UK Household Finance Index increased to a one-year high of 44.6 this month from 43.2 in December. The reading coincides with other sentiment polls that suggest an increase in optimism after Prime Minister Boris Johnson secured a historic victory in the election.

Asian shares declined earlier today amid concerns that a new strain of coronavirus in China could spread and damage the economies.

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