- Pound (GBP) drops on weak CPI
- Manufacturing & service sector PMIs due
- Indian Rupee (INR) rises despite surging covid cases & equities falling
- WTI tanks -6.4%
The Pound Indian Rupee (GBP/INR) exchange rate is trending lower for a fifth consecutive session. The pair settled -0.55% lower on Wednesday at 99.75, below the key 100.00 level. At 08:45 UTC, GBP/INR trades -0.37% at 99.41.
The Pound is under pressure after weaker than expected inflation data. Inflation, as measured by consumer price index (CPI) rose 0.1% month on month in February. This was up from January’s -0.2% decline but still short of the 0.5% reading expected. Annually, inflation rose 0.4%, well down from 0.7% in the previous month and below the 0.8% reading expected.
Attention will now turn towards the manufacturing and service sector PMIs due for release later today. Whilst the manufacturing sector has been a bright spot through the pandemic, the service sector has been more negatively impacted by the lockdown conditions.
Even so, activity in the service sector is expected to have moved back into expansionary territory in March to 51 on the index, up from 49.5 in February. The level 50 separates expansion from contraction.
The Rupee is managing to strengthen despite a resurgence of covid in the country. Covid cases have been climbing steeply higher over the past week, raising concerns of additional lockdown restrictions impacting on economic growth.
Whilst new daily covid cases are at the highest level in 4 months, the vaccination programme is also starting to ramp up.
Domestic equities were supportive of the Rupee with both the Sensex and the blue chip Nifty 20 closing on higher ground on Tuesday. However, the risk off mood is dragging on domestic equities today, although the Rupee is shrugging off the move lower.
Oil prices plunged lower in the previous session amid growing concerns over future demand as covid cases in Europe rise and tighter lockdown restrictions are implemented. West Texas Intermediate settled -6.4% lower on Tuesday, at $57.58.
After 4 months of strong gains WTI has now lost over 12% of its value across the past 10 days.