- Indian Rupee (INR) drops as covid cases top 330,000
- RBI warns on impact of covid
- Pound (GBP) rises after stellar retail sales data
- UK PMIs in focus
The Pound Indian Rupee (GBP/INR) exchange rate is pushing higher after steep losses in the previous session. The pair settled 1% lower on Thursday at 103.92. At 08:45 UTC, GBP/INR trades +0.1% at 104.04. The pair is on track to gain 0.8% across the week, its fourth straight week of gains.
UK retail sales surge in March ahead of the easing of lockdown restrictions in the UK. Retail sales jumped 5.4% month on month. This was up from last months’ already strong 2.2% increase. On an annual basis sales rose 7.5% smashing forecasts of 3.5%.
Attention will now turn to the PMI data for both the service sector and the manufacturing sector. Whilst the manufacturing sector has proved to be resilient through the pandemic, all eyes will be on service sector activity as the UKA economy reopened in April.
Analysts are expecting to see the service sector PMI surge to 59 in April, up from 56.3 in March as businesses and households were preparing to reopen. The manufacturing sector is also expected to show 59 on the PMI index. The level 50 separates expansion from contraction.
The Rupee remains broadly out of favour as the covid situation in the country spirals desperately out of control. The number of new daily cases hit a fresh record high on Friday of 330,000 whilst the death toll surges higher.
With more states locking down a strong economic impact appears unavoidable now. The minutes to the latest MPC meeting revealed that Reserve Bank of India’s Governor Shakktikanta Das sees the steep rise in covid infections as the biggest challenge to the economic recovery.
The MPC kept interest rates low at 4% earlier this month saying that policy would remain accommodative until a sustained recovery was secured.
The central bank highlighted that they had already used much of their ammunition, although stressed that there was still room to act.