GBP/INR is declining in early trading on Tuesday, after three bullish sessions in a row. At the time of writing, one British pound buys 98.655 Indian rupees, down 0.27% as of 7:00 AM UTC. Yesterday, the pair touched the 99.000 level for the first time since the end of August. The price is declining even as the pound is moving in tandem with the euro and up against the US dollar. This suggests a bullish rupee that is driven by upbeat economic data at home.
Business activity in India updated the highest level since the lockdown was introduced back in March. The Nomura India Business Resumption Index (NIBRI) rose to 87.1 in the week ended November 22, after a reading of 84.4 in the previous week.
Still, Nomura said that regional lockdowns could slow the economic recovery, which otherwise is gaining traction.
Yesterday, the Federation of Indian Chambers of Commerce & Industry (FICCI) said that the country’s manufacturing industry had likely experience recovery in the three months to September, even though hiring figures were bleak.
UK Services Sector Tumbles to 5-Month Low
Meanwhile, business activity in the UK has contracted in November amid the resurgence of the COVID pandemic, which hit the services sector. Still, the vaccine news is fueling hopes for next year. The flash reading of the UK’s composite purchasing managers index (PMI) compiled by IHS Markit dropped to 47.4 from 52.1 in October, which is the lowest level in five months. Still, the decline was smaller than the nosedive to 42.5 expected by analysts polled by Reuters.
Despite the lockdown, manufacturing actually accelerated, with its PMI ascending to 55.2. Factory clients are building stocks in the case of a no-deal Brexit. Hugh Gimber, a strategist at JPMorgan Asset Management, commented:
“The two-speed nature of the recovery is increasingly clear. The manufacturing sector continues to tick along at a healthy pace, while new lockdowns have slammed the brakes on the nascent recovery in the service sector.”
As for the Brexit talks, the UK and the EU are still negotiating the most sensitive issues. Britain’s transition period expires on December 31.
Yesterday, Bank of England Governor Andrew Bailey said that a no-deal Brexit might cause longer-term economic damage compared to the pandemic.