GBP/INR is trying to recover after tumbling 1.88% on Monday. The pair is now trading at 92.752, up 0.11% as of 6:00 AM UTC.
GBP/INR – The sterling continues to gain on positive construction data
However, the British currency cannot accelerate its bullish move for now as the Indian rupee is supported by fresh services sector data. IHS Markit said that India’s services purchasing managers’ index (PMI) rose to 55.5 in January, from 53.3 in December, which is the highest level in seven years. The indicator was supported by domestic demand.
Nevertheless, the growth in demand came along with inflationary pressure on input costs, which also rose to the highest in seven years.
IHS Markit principal economist Pollyanna de Lima commented:
“With business revenues rising, service providers continued to increase capacity to meet further strong growth in sales. This is good news for jobseekers, particularly when we consider the results from the manufacturing industry which showed the steepest upturn in employment since August 2012.”
The demand came mostly from the domestic market, as the exports to China, Europe and the US declined after ten months of expansion.
The Indian economy shows signs of recovery after several months of struggle. However, Moody’s Investors Service said yesterday that the economic outlook presented by Finance Minister Nirmala Sitharaman in her Budget for 2020-21 is too ambitious considering the structural challenges. The minister anticipates nominal gross domestic product (GDP) growth of 10% in the next fiscal year, followed by growth of over 12.5% in the fiscal years 2022 and 2023.
But for Moody’s, the figures are exaggerated. The rating agency said:
“We expect the economy to rebound at a more modest pace, with nominal GDP growth rising to around 8.7 per cent in fiscal 2020 and 10.5 per cent in fiscal 2021, from about 7.5 per cent in fiscal 2019.”
The GBP/INR pair is also closely following the post-Brexit events. The markets are now watching the debate between UK Prime Minister Boris Johnson and European leaders, who cannot find consensus on how the trade deal between the two sides should be reached.
