Indian Rupee News: GBP INR Exchange Rate Soars despite Manufacturing Shortfall

Positive Response to UK Production Data Pushes GBP/INR Exchange Rate Higher

The Pound to Indian Rupee (GBP/INR) exchange rate has risen to the highest level of 2018 today, trading in the region of 91.03.

This represents an historic advance in the GBP/INR exchange rate, with the pairing also hitting its highest level since June 2016.

This appreciation follows news that the UK manufacturing activity has slowed in January, as shown by Markit’s PMI reading for the sector.

Making a balanced response to the data, IHS Markit Director Rob Dobson said:

‘The UK manufacturing sector reported an unwelcome combination of slower growth and rising prices at the start of 2018.

Encouragingly, despite the slowdown, the latest survey is consistent with production rising at a solid quarterly rate of around 0.6% in January, with jobs also being added at a faster pace.’

Higher employment could lead to higher wage growth across the UK, which in turn will lessen the strain on UK consumers, who are battling with high inflation.

GBP/INR Exchange Rate Strengthens on Brexit Minister’s Optimism

Another factor increasing demand for the Pound today was a statement from David Davis, the UK Brexit Secretary.

Commenting on a recently leaked pessimistic Brexit forecast, Mr Davis has done his best to reassure voters and investors, saying:

‘Every forecasting model on the performance on the British economy post the referendum by every major organisation … has proven wrong. One of the ways it has been proven wrong is because employment in this country has grown despite the forecasts to record levels today. We will be seeking to do the best we can to ensure that growth record is maintained.’

Indian Rupee to Pound Exchange Rate Slides as Manufacturing Slows

While Pound traders refused to be spooked by the recent UK manufacturing slowdown, a similar reduction in Indian manufacturing activity hasn’t had the same effect.

The Rupee has tumbled against the Pound following the news that January’s manufacturing PMI reading has slowed, from 54.7 points to 52.4.

This drop was a step down from the index’s 5-year high, which was reached in December 2017.

Summarising the factors behind the shift, Markit’s Aashna Dodhia said:

‘Following December’s stellar performance, growth in the Indian manufacturing economy lost some impetus, reflected by slower growth in output, new orders and employment.

The Goods and Services Tax (GST) somewhat continues to remain a risk to business performance as firms faced further delayed payments.’

Pound to Rupee Exchange Rate Forecast: Further GBP Gains Possible after BoE Policy Meeting

The Pound could extend its gains against the Indian Rupee on 8 February, when the Bank of England (BoE) holds its first monetary policy meeting of 2018.

If BoE officials are unified in predicting better economic conditions ahead for the UK, as voiced by Governor Mark Carney this week, the Pound is likely to rise in value.

Mirroring this situation, the Reserve Bank of India (RBI) will be making an interest rate decision on 7 February, although the current 6% rate is not expected to change.

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Laura Parsons

Laura has been working in the financial services sector since 2012 and provides currency news updates for a number of online and print publications. Over the years she has produced exchange rate analysis for publishers like French Property News, The Express, The Telegraph and Forbes.

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