British Pound to Rupee Exchange Rate Forecast: GBP/INR Weaker on PMI Data

November 5, 2014 - Written by Tim Boyer

STORY LINK British Pound to Rupee Exchange Rate Forecast: GBP/INR Weaker on PMI Data

The Indian Rupee exchange rate (INR) weakened against the Pound (GBP) as disappointing Chinese data combined with softer than forecast Indian PMI data. Sterling was able to advance despite poor data from the UK.

As the Rupee is an emerging market currency, it was particularly vulnerable to the weak data out of China.

According to the HSBC/Markit compiled Chinese services purchasing managers index (PMI), activity declined to its lowest level in three months in October.

INR Rates Today:

The Pound to Rupee exchange rate today (GBP/INR) converts at 97.9805.
The Euro to Rupee exchange rate today (EUR/INR) converts at 76.60472.

The data added to signs that the world’s second largest economy is slowing down and increased calls for the Beijing based government to introduce more stimulus measures.

The Chinese PMI fell 52.9, the lowest level recorded since July from the 53.5 reading recorded in September. In a PMI, any figure above 50 indicates expansion whilst a number below indicates contraction.

Service sector activity also slowed in India with growth in the dominant sector stalling in October. New orders came in at a weaker pace and pressure has increased on the Indian government to pick up the pace with introducing promised economic reforms.

The HSBC PMI fell to a reading of 50 last month, down from the 51.6 recorded in September. The figure was the lowest recorded in six months. The data shows that consumer demand is flagging. Prices also remain close to a four-year low.

The Modi government has increased the speed in which it implements economic reform and economists are forecasting that those changes will boost Indian economic growth to its fastest pace in two years this year.

‘The revival of reforms post recent state elections, if sustained, should lift growth on a broad basis,’ said Frederic Neumann, co-head of Asian economic research at HSBC.

The UK services industry PMI also disappointed economists as it showed that activity in the nation’s dominant sector declined to a more than one-year low. The PMI fell to 58.7 in September to a one-year low of 56.2. Economists had been forecasting for a figure of 58.5.

‘This month appears to be a slowdown month as the services sector comes off the boil, challenged by capacity constraints, increased backlogs and a slight reduction in new business growth,’ said David Noble from ING.

The Rupee to Dollar exchange rate was also under heavy pressure from the buoyant USD.

The midterm election victory for the Republican Party bolstered demand for the currency as economists raised their hopes that the political deadlock in Washington will now be broken.

The Republicans now have control of both the Senate and House of Representatives.

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