Pound to Indian Rupee (GBP/INR) Exchange Rate News – Rupee Trading Higher after Indian Manufacturing Output Impresses

The Rupee was able to adopt a firmer stance during local trading and advance on both the Pound and US Dollar as an Indian manufacturing report showed that the pace of expansion was at its strongest for ten months in January.

India’s HSBC manufacturing PMI came in at 51.4 in the first month of 2014, a considerable improvement on December’s reading of 50.6 and the best result since March of last year.

Although the pace of output remains well below the nation’s series average of 55.1, that fact that the gauge hasn’t slipped below the 50 mark separating growth from contraction in spite of the numerous pressures weighing on the Indian economy is positive.

The report also detailed a fourth month of rising employment while average input costs climbed as a result of pricier raw materials like metals and chemicals.

In the opinion of HSBC economist Leif Eskesen; ‘Manufacturing activity moved into a higher gear led by faster growth in new orders. However, inflation pressures also firmed, suggesting that the RBI has to keep up its inflation guards.’

While the Rupee initially advanced on the US Dollar after the data was published, the Indian currency pared gains against the ‘Greenback’ as state-run banks bought Dollars and foreign banks braced themselves for the Reserve Bank of India’s reference rate setting.

The USD/INR pairing could move higher later today if US manufacturing and construction spending reports show improvement.

Meanwhile, the Rupee was able to consolidate gains against the Pound during European trading as the British asset came under pressure following a disappointing manufacturing output report for the UK.

UK manufacturing PMI came in at 56.7 in January, down from a revised 57.2 the previous month.

As observed by currency strategist Jane Foley; ‘Whatever changes are made, the purpose of that will be to allow a dovish outlook to be maintained by the Bank of England. The data that we’ve had since the start of the year have been good, but many people have been disappointed it hasn’t been better. That’s taken some of the froth out of expectations for the performance of the UK economy and Sterling.’

As the week progresses Indian reports to look out for include Wednesday’s HSBC/Markit Services PMI and Friday’s foreign reserves data.