Pound Indian Rupee (GBP/INR) Exchange Rate Slides as UK Construction Contracts on Brexit Pessimism
The Pound Sterling Indian Rupee (GBP/INR) exchange rate fell by around 1.3% today, and the pairing is currently trading at an inter-bank rate of ₹89.4659.
Data released on Tuesday morning showed that the UK’s construction sector was in its second consecutive month of contraction.
Up slightly from February’s figure of 49.5, March’s PMI clocked in at a worse-than-forecast 49.7.
The data released by IHS Markit showed that an upturn in residential building was offset by a drop in commercial work and civil engineering activity.
Commenting on the data, Group Director at the Chartered Institute of Procurement and Supply, Duncan Brock said:
‘The situation in the UK construction sector was broadly unchanged from February, with PMI data posting a second consecutive month in contraction. The fault of this continuing inertia was placed squarely at the feet of Brexit.
‘It is unlikely that next month will bring about any positive news given the challenges of a weaker UK economy, volatile Pound and intense competition for new orders, as Brexit continues to cast a long shadow over the sector’s future.’
Brexit Deadlock Weighs on Sterling (GBP)
The UK Prime Minister is currently holding five hours of cabinet talks in an attempt to break the Brexit deadlock.
On Monday evening the House of Commons was left rudderless as MPs rejected all four alternatives to Theresa May’s Brexit withdrawal agreement.
Sentiment in Sterling was dampened further as the possibility of a no-deal Brexit increased ahead of the new 12 April deadline.
Commenting on the increased likelihood of the UK leaving the union without a deal, Chief European Union Negotiator Michel Barnier said:
‘No deal was never our desire or intended scenario but the EU 27 is now prepared. It becomes day after day more likely.’
Indian Rupee (INR) Rises as RBI Announces Further USD/INR Auction
The Indian Rupee (INR) rose against the Pound (GBP) following reports on Tuesday that the Reserve Bank of India (RBI) has decided to conduct another US Dollar/Indian Rupee Buy/Sell swap auction on 23 April.
The RBI said in a statement that this course of action was due to the need of meeting the durable liquidity requirements of the system.
Markets expect the RBI to come up with more auctions, and these measures have been called the most innovative instrument the bank had come up with in place of regular buying of government securities under open market operations as a liquidity tool.
Pound Indian Rupee Outlook: Will the GBP/INR Exchange Rate Slide if the UK Services Sector Slows?
Looking ahead to Wednesday, the Pound (GBP) is likely to continue to slide against the Indian Rupee (INR) following the release of the UK services PMI.
If March’s data shows that growth in the services sector has slowed, sentiment in Sterling could be dampened.
On Thursday, the Reserve Bank of India (RBI) is due to release March’s interest rate decision.
If interest rates remain unchanged it could cause the Pound Indian Rupee (GBP/INR) exchange rate to slip further.