Worsening GBP/INR Exchange Rate Caused by Snow-Hit UK Services Sector
The news that activity in the UK services sector slowed by more than expected in March has disappointed Pound traders today, leading to GBP/INR exchange rate losses.
The reading showed a drop from 54.5 points to 51.7, a noticeably lower figure than the expected 53.9 point outcome.
Summarising the contributing factors to this slowdown was CIPS Group Director Duncan Brock, who said:
‘Momentum stalled in March as the Beast from the East struck again causing … the slowest new order growth for 20 months and impacting on overall business activity.
As UK services remain the largest driver of economic growth, the … snow, inflation and Brexit-related uncertainty struck at the sector’s heart, as consumer buying dwindled, bad weather halted business operations and optimism was at its lowest ebb since June 2017.’
Plummeting UK Car Sales Brings Further Pound to Rupee Exchange Rate Losses
Compounding the negative impact of the services sector reading, Pound to Rupee losses have been extended by the news that the UK automobile sector is struggling.
New car registration numbers fell by -15.7% in March 2018, compared to the same month in 2017.
The Society of Motor Manufacturers and Traders (SMMT) blamed the slowdown on the background levels of economic uncertainty, of which Brexit was partly the source.
Rising Indian Services Sector Activity Boosts Indian Rupee to Pound Exchange Rate
In a tale of opposites, the Indian Rupee to Pound exchange rate has conversely risen today following the release of supportive services sector data.
The Nikkei services PMI for March showed a rise from contraction to growth, with a jump from 47.8 points to 50.3.
Discussing the detail of the services sector report, IHS Markit Economist Aashna Dodhia said:
‘India’s service activity stabilised at the end of the quarter, underpinned by a renewed rise in new work. Anecdotal evidence highlighted an improvement in demand conditions.
In response to efforts undertaken by the Indian government to formalise the economy, more people are gravitating towards employment as signalled by the latest PMI data.
Overall, the decline in [services sector] activity during February proved to be transitory, as India’s overall economy returned to expansion territory in March.’
Pound to Indian Rupee Exchange Rate Forecast: Will GBP/INR Advance on UK Production Stats?
The near-future will only bring a few high-impact UK data releases, when national trade balance and production figures come out on 11 April.
The most significant of the ecostats, the trade balance reading for February, is tipped to show a potentially damaging expansion of the existing deficit from -£3.074bn to -£3.4bn.
Also out on the day will be industrial and manufacturing production stats, although these may boost demand for the Pound if they show a forecast-matching rise in activity.
Potentially furthering GBP/INR exchange rate gains next Wednesday, a greater than expected rise in construction output could also boost Sterling demand.
Indian production data will also be out next week, with national industrial and manufacturing figures for February being announced on 12 April.
As with the Pound, the Rupee could also see an appreciation on the news as estimates are for growth in both sectors.
The Rupee could also be affected by any further US-China trade war talk.
Economists warn that if both countries go ahead and enact tariffs against one another, India could become a ‘dumping ground’ for excess products.
A flood of foreign goods into the Indian market could harm domestic manufacturers, who would potentially have to compete with low prices on foreign imports.