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INR bank notes

GBP/INR is struggling to maintain above 98.000 after losing half a percent on Thursday. At the time of writing, one British pound buys 98.043 Indian rupees, up 0.11% as of 7:40 AM UTC. On the daily chart, the price is still above the support line of an uptrend that started at the end of September, despite yesterday’s losses.

On Thursday, the UK’s Office for National Statistics (ONS) reported disappointing GDP data for September and the third quarter. Britain’s record quarterly growth of over 15% missed expectations.

The pound reacted to the figures and dropped below 98.000, finding support at around 97.800.

India’s Inflation Keeps Above 7%, Which Leaves RBI with Hands Tied

Several hours after the ONS report, India’s Ministry of Statistics said that retail inflation remained above the 7% level for the second straight month in October, which makes it difficult for the Reserve Bank of India (RBI) to further cut the interest rate in an effort to support the economy. The RBI’s inflation target ranges between 2% and 6%.

In October, India’s CPI inflation came in at 7.61%, as food prices rose amid supply disruptions caused by the pandemic and the subsequent lockdown measures. The consumer food inflation surged over 11%.

Thus, the retail inflation figure maintains above the central bank’s upper target for the seventh consecutive month. Under these circumstances, the RBI will most likely leave the rate unchanged in December and will wait for another series of inflation data before pondering further ease. This will happen no earlier than February next year. The central bank said in its October review:

A bumper rabi crop, moderate increases in minimum support prices (MSPs) for kharif crops, a normal monsoon, sizeable buffer stocks and good water storage levels in major reservoirs augur well for the inflation outlook.

The RBI expects the retail inflation to decline in the second half of the current fiscal year. It anticipates the CPI to drop below 6% in Q3 and below 5% in the final quarter.

India also released an update on its industrial production, which rose 0.2% in September compared to a 4.6% drop in the same period last year. This was the first increase in six months. Still, manufacturing continued to contract.