GBP/INR is slightly bullish in early trading on Tuesday, after slipping 0.24% at the start of the week. Currently, one British pound buys 94.232 Indian rupees, up 0.11% as of 7:00 AM UTC. The pair has broken below 94.000, but the support proved to be reliable. Larger timeframes show that the rupee is trading within a sideways channel after rallying at the end of March.
There are no fundamentals to back the move at the moment. The price is trading from resistance to support and vice versa.
Still, the rupee has been losing ground after IHS Markit data showed that India’s manufacturing activity had experienced an unprecedented contraction in April. The collapse in the manufacturing industry came amid a national lockdown imposed by the government.
Indian rating agency ICRA said yesterday that the economy might contract by up to 20% in the three months through June, which will result in an annual contraction by 2% in the fiscal year 2020-21. The government is gradually relaxing some of the restrictive measures, though it extended the lockdown until May 17. The agency said:
“While the graded relaxations announced by the government will permit the resumption of economic activity, the relatively stringent norms in major urban centres will result in the pace of activity remaining constrained.”
Sentiment Among UK Consumers and Small Companies at the Lowest in Years
In the UK, the economy is facing similar challenges caused by the lockdown measures that have been extended.
Earlier Tuesday, British YouGov and CEBR released the results of a survey that pointed to a decline in consumer sentiment. Households’ morale dropped to the lowest level since January 2012.
Separately, the Confederation of British Industry (CBI) said that small manufacturers anticipated the biggest decline in output in over three decades over the next three months. CBI data shows that small manufacturers have already experienced the largest drop in production since the financial crisis in 2008. CBI economist Alpesh Paleja said:
“SME manufacturers are seeing a sharp shock to activity due to the COVID-19 outbreak, with expectations signalling a sharper downturn to come.”
Later today, the UK will release the services PMI data, which will definitely affect the pair.
