The Pound (GBP) gave up recent gains against the India Rupee (INR) to fall back below the 100.0 level on Wednesday after a disappointing UK Manufacturing Purchasing Managers Index weighed upon sentiment towards the currency.
Early in the session, the Rupee has been weaker after a report showed that factory activity in India expanded at its slowest pace in nine months. With Manufacturing PMI’s showing declines in the majority of nations, concerns over the strength of the global economy have increased.
According to the HSBC Manufacturing PMI, report compiled by Markit production in India dropped to 51.0 in September, down from the 52.4 figure seen in August. The report shows that production activity has remained above the 50 mark, which divides expansion from contraction for an eleventh consecutive month.
“Responding to the slowdown, firms lowered purchases and trimmed inventories. The rate of cost inflation decelerated sharply and output prices were unchanged,” said Frederic Neumann, co-head of Asian economic research at HSBC.
Following the release of the data, the Pound to Indian Rupee exchange rate hit a session high of 100.4300.
Sterling then went on the back foot to slide to a session low of 99.7340 after the release of a Manufacturing PMI report that came in below economist expectations.
The data showed that manufacturing in the UK expanded at its slowest pace in 17 months as demand from the Eurozone waned.
The data also weighed on the Pound as some economists grew concerned that the Bank of England may grow nervous to introduce an interest rate hike.
‘The report will add to the air of caution as to whether the economy is ready for higher interest rates. The picture of waning inflationary pressures painted by industry may provide some leeway for the Bank of England to hold off from raising rates even if strong growth persists,’ said Rob Dobson, an economist from Markit.
Markit Economics said its Purchasing Managers’ Index fell to 51.6 from 52.2 in August, the lowest since April 2013. A measure of new orders dropped to a 19-month low of 50.5.
Pound Sterling to Indian Rupee exchange rate forecast
The GBP/INR exchange rate is forecast to remain mixed over the rest of the week, as economic data due for release out of the UK is likely to show further signs of softening.
Thursday sees the publication of the latest Construction PMI data, which is forecast to slip from a reading of 64.0 to 63.5.
UPDATE
Although emerging-market currencies like the Indian Rupee were supported by a softening in the US Dollar, the Pound managed to recoup some of its losses against its rival on Thursday.
The Pound fluctuated against several of its most traded peers in response to the news that a gauge of the UK Construction sector unexpectedly increased in September.
Also on Thursday the Bank of England endorsed the UK’s flagship home-loans guarantee scheme.
In its latest statement, the BoE Financial Policy Committee intimated that, although data has indicated that the UK property sector is cooling, housing remains a risk.
With Indian data lacking on Thursday, any further GBP/INR fluctuations are likely to occur as a result of global economic developments.
Indian Rupee (INR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Indian Rupee,
,US Dollar,0.0162 ,
Indian Rupee,,British Pound,1.0013 ,
Indian Rupee,,Euro,1.2869 ,
Pound Sterling,, Indian Rupee,99.7030 ,
Euro,, Indian Rupee,77.6100 ,
US Dollar,, Indian Rupee,61.6100 ,
[/table]
