- Pound (GBP) lower as UK economy 9% smaller than pre-pandemic
- Manufacturing & industrial production output also hit by Brexit
- Indian Rupee (INR) but set for weekly losses
- Inflation for February expected at 4.38%
The Pound Indian Rupee (GBP/INR) exchange rate is edging lower on Friday. The pair settled +0.4% higher at 101.69 in the previous session towards the high of the day. At 08:45 UTC, GBP/INR trades -0.2% at 101.51. The pair is on track to gain 0.4% across the week recouping some of the -1.6% decline from the previous week.
The Pound is coming under pressure after a slew of data revealed a mixed picture for the UK economy.
The monthly GDP release for January came in better than expected. The economy contracted -2.9% at the start of the year as the UK went into its third national lockdown. This was down from 1.2% growth in December, but better than the -4.9% contraction expected.
The UK economy is 9% smaller than it was at the start of the pandemic.
Meanwhile manufacturing and industrial production were significantly weaker than expected highlighting the impact not only of the covid lockdown but also the Brexit.
Output in the industrial sector dropped 1.5% whilst manufacturing output declined 2.3%
On the data front investors had several releases to digest. India’s inflation is expected to have risen in February amid rising food and fuel prices. That said, inflation is expected to remain within the Reserve Bank of India’s target range for a third straight month.
A poll by Reuters of 50 economists put retail inflation expectations at 4.38% in February up from 4.06% the previous month. This remains within the central bank’s upper target limit of 6%.
Industrial production for January came in line with forecasts at a 1% increase year on year. Manufacturing production however came in below forecasts at 1.6% year on year below the 2% expected.
Investors will now look towards the release of weekly foreign exchange reserve data due to be released later.
