GBP/INR cannot reverse the downtrend that started to form last week. However, the pace of decline has eased. Currently, one British pound buys 94.066 Indian rupees, down 0.04% as of 6:40 AM UTC. Last Monday, the pair was trading above 95.300.
Investors are now assessing the rapid increase in the number of coronavirus cases and further stimulus measures from the US and the European Union. The UK-China relationship is also in the spotlight.
The rupee will likely give up strength this week, as India continues to update the record daily increase in COVID infections. On Sunday, the new all-time high was set at over 40,000 new cases reported within 24 hours.
Yesterday, the Federation of Indian Chambers of Commerce and Industry (Ficii) said that the proportion of manufacturers experiencing an increase in production fell 10% during the three months to June from 15% in the previous quarter. The survey involved more than 300 manufacturing units from India’s large-cap and SME segments. The automotive industry suffered the most, Ficii said. Other sectors hit by lockdowns were leather and footwear and electronics.
About 85% of the companies said that they would not hire additional workers in the next three months. Ficci concluded:
“This presents a worrisome situation in the hiring scenario as compared to the previous quarter Q-4 of 2019-20, where 78 per cent of the respondents were not in favour of hiring additional workforce.”
UK Housing Mini-Boom On The Rise
Elsewhere, the pound might benefit from easing restrictions and a decline in new COVID cases. Property Rightmove said that the housing market is experiencing a mini-boom after the tax cut announced by finance minister Rishi Sunak. The number of housing sales agreed in England alone surged by 35% year-on-year in the five days after the tax cut announcement.
Rightmove said that house prices offered by sellers rose by 3.7% year-on-year in the period between June 7 and July 11, to a record average of 312,625 pounds. Rightmove Director Miles Shipside commented:
“These figures are the earliest indicator of house price trends. They show on average prices gently rising not falling, and this will be reflected in the coming months in other house price reports.”
Later today, two Bank of England policymakers are scheduled to speak, which might boost volatility in the GBP/INR pair.
