GBP/INR has abandoned its determination to update the highest level in over four years and potentially hit the psychological level of 100.00. On Friday, the pair lost over 1%, and now it’s also flashing red. At the time of writing, one British pound buys 97.923 Indian rupees, down 0.08% as of 7:45 AM UTC. Last week, the price seemed to have consolidated above 99.000, but that didn’t last longer than a few days.
The retreat has been probably caused by the pair’s wobble in the overbought level. When it comes to fundamentals, it has to do with investors’ concerns over the trade talks between the UK and the European Union, which cannot reach consensus on several key aspects. Otherwise, the UK published a series of upbeat data that should have supported the pound to continue its rally.
On Friday, the Office for National Statistics (ONS) said that British retail sales jumped past their pre-COVID levels in July. That was the first full month when non-essential stores were open after the lockdown was imposed in March.
UK’s Composite PMI Surges to Over 60
Separately, IHS Markit released preliminary data covering the UK’s services and manufacturing sectors. The flash reading showed that the recovery among businesses accelerated in August, but an increase in job cuts might have repercussions in the coming months. The UK’s composite purchasing managers index (PMI), which merges both the dominant services sector and the manufacturing industry, rose to almost a seven-year high at 60.3 from 57.0 in July. Economists surveyed by Reuters anticipated a slight increase to 57.1. The 50 mark separates growth from contraction.
Even though the PMI suggests further growth, businesses haven’t returned to pre-COVID levels. Some economists argue that it would require years.
Tim Moore, economics director at IHS Markit, commented:
“There were encouraging signs that customer-facing service providers have started to catch up with the rebound seen earlier this summer across the wider economy, with easing lockdown measures, staycations and the Eat Out to Help Out.”
UK government data showed that the public debt surged above 2 trillion last month for the first time ever. It reached 100.5% of GDP, the highest since 1961.