- Pound (GBP) supported by upbeat GDP data
- UK manufacturing PMI in focus
- Indian Rupee (INR) slips as covid cases to 70,000
- Oil prices fall on demand concerns
The Pound Indian Rupee (GBP/INR) exchange rate is rebounding on Thursday after closing lower in the previous session. The pair settled marginally lower on Wednesday -0.1% at 100.77, after four straight sessions of gains. At 08:45 UTC, GBP/INR trades +0.22% at 101.02
UK data revealed that the UK economy rebounded strongly in the fourth quarter. The final reading of the fourth quarter GDP printed at 1.3%, above the 1% expected and previously recorded.
Despite the strong bounce in the final quarter the UK economy contracted by 9.8% across 2020, the worst contraction in 300 years and the deepest contraction of all OECD countries except for Argentina and Spain.
Today the economic calendar will remain in focus with the release of manufacturing PMI data. This sector has been a bright spot throughout the pandemic. Activity in the manufacturing sector is expected to have expanded firmly again in March at 57.7. A strong reading could boost the Pound higher.
The Rupee is under pressure across the board as the covid picture deteriorates in India. The number of new daily infections has hit a fresh 5 month high at over 70,000. Fears are rising that renewed lockdown restrictions could hinder the recovery.
Separately, the Indian government and central bank have agreed to retain the bank’s inflation target of 2% – 6% for the next 5 years.
Earlier in the week, Moody’s Analytics commented that India’s inflation level was running higher than comfortable, even as inflation remained subdued in the majority of Asian economies.
Higher fuel prices are expected to keep inflation elevated, which would give the Reserve Bank of India little to no breathing space for further rate cuts.
Retail inflation surged 5% in February, up from 4.1% in January.
Oil prices have been supportive of the Rupee. Rising covid cases in Europe, India and Brazil has clouded demand outlook and oil stumbled over 1.5% in the previous session.