GBP/INR continues to advance on Tuesday, after adding over 1% on Monday, which was the largest daily gain since April 1. The rally started in mid-May, when the pair was trading below 92.000. At the time of writing, one British pound buys 94.480 Indian rupees, up 0.14% as of 6:10 AM UTC. The next resistance level would be reasonable to expect at around 95.000.
The pound is now driven by talks about reopening of the economy. Meanwhile, trade talks between the UK and the European Union restart this week and there are first signs of hopes that the negotiations will lead to some results. Apparently, Britain is ready to compromise on fisheries, which has been a big argument in the negotiations. However, the EU should agree to reduce its “maximalist” demands on regulatory compliance.
On the other side, a European official source commented:
“There is only one way to get things moving and that is for the UK side to move and then, as Frost (Britain’s chief negotiator) knows full well, the EU will move too.”
UK’s Manufacturing PMI Improves in May
As the trade talks are heating up, market researcher IHS Markit released Britain’s manufacturing activity data. The industry’s purchasing managers index (PMI) increased to 40.7 in May, from a record low at 32.6 in April. This suggests that the manufacturing pointed to downturn in May, but the pace of decline eased. The 50 mark separates growth from contraction.
IHS Markit director Rob Dobson commented:
“Those who typically see the glass half empty will note that the UK manufacturing sector remained mired in its deepest downturn in recent memory. Output, new orders and employment fell sharply again in May as restrictions to combat the spread of COVID-19 caused further widespread disruptions to economic activity, demand and global supply chains.”
He also referred to the glass-half-full perspective, mentioning the slowdown of contraction.
As for India, the economy continues to struggle with the impact of the lockdown measures. Some of the restrictions were lifted in an effort to support the economy, but most of the sectors are paralyzed. Yesterday, Markit released the manufacturing PMI for India, which was at 30.8 in May.
