- Pound (GBP) supported by strong fundamentals
- UK household card spending at 88% of pre-pandemic levels
- Indian Rupee (INR) declines as covid cases hit record high
- Foreign exchange reserves data in focus
The Pound Indian Rupee (GBP/INR) exchange rate is consolidating after two straight sessions of gains. The pair settled +0.3% higher on Thursday at 102.42 slightly down from the 5 month high of 103.08 reached in the previous session. At 07:45 UTC, GBP/INR trades -0.05% at 102.33. The pair is set to gain just shy of 1% across the week, its second straight week of gains.
The Pound remains well supported by strong fundamentals. New daily covid cases continue to decline, dropping by over 30% in a week, to 3030. England will reopen all shops, hairdressers and outside hospitality as from Monday.
British household spending on credit and debit cards rose to 88% of pre-pandemic levels last week. This was the highest level recorded since just before Christmas. The strong data indicates that the economy is starting to pick up again as covid restrictions ease.
Adding to the upbeat news construction activity grew at the fastest pace since 2014 in March boosted by a restart in postponed leisure and office projects. The Markit/IHS construction PMI jumped to 61.7 in March from the 53.3 the previous month. This was significantly ahead of the 54.6 expected. The level 50 separates expansion from contraction.
The immediate outlook for the Indian economy is much weaker given the surging rate of covid ion the country. A fresh record 126,000 new daily cases were recorded on Thursday, with many states tightening lockdown restrictions in an attempt to stem the spread of the virus. Concerns are rising that this resurgence will derail the economic recovery.
Attention will now turn to the foreign exchange reserve data from the Reserve Bank of India. Last week foreign exchange reserves held by the central bank fell by $2.98 billion to $579.28 billion.