- Indian Rupee (INR) slips as services PMI slows to 54.0
- Prices rise but RBI to hold steady on policy
- Pound (GBP) underpinned by manufacturing PMI data
- BoE in focus tomorrow
The Pound Indian Rupee (GBP/INR) exchange rate advancing, paring losses from the previous session. The pair settled -0.15% on Tuesday at 102.47 towards the low of the day. At 08:45 UTC, GBP/INR trades +0.35% at 102.74.
Data revealed that growth in India’s dominant service sector eased to a three month low in April. However, it has remained surprisingly resilient given the covid crisis facing the country.
The Nikkei/IHS PMI fell to 54.0 in April, down from 54.6 in March. Whilst this is the lowest reading since January, it is also above 50 the level which separates expansion from contraction. Analysts had been expecting the PMI to fall to 51.1.
However, cost pressures were also seen to be rising extremely quickly. Input costs have now risen for the past 10 consecutive months on the back of higher food and fuel prices. Despite rising prices the Reserve Bank of India is not expected to raise interest rates this year.
The data comes as India’s covid infections burst past 20 million and as 11 states and regions impose movement restrictions in order to stem the spread of the virus.
Strong UK manufacturing activity data underpins the Pound. The manufacturing PMI printed above expectations in April with activity expanding at the fastest pace since 1994. The PMI came in at 60.9, ahead of the 60.7 preliminary reading.
New orders remained elevated for a third straight month, reaching a 8.5 year high. The ongoing global economic rebound has seen international demand jump.
The UK economic calendar is quiet today Attention is turning to the Bank of England monetary policy announcement tomorrow.
The central bank expected to keep monetary policy unchanged. Therefore, the central focus will be on BoE Governor Andrew Bailey’s tone. Owing to the rapid vaccine rollout and the easing of lockdown restrictions, the UK economy is in a very different position now than it was just a few months ago. Investors will be listening intently to see whether the central bank is hinting towards a more hawkish stance.