GBP/INR is increasing in early trading on Monday, after touching the lowest level of the month on Friday. Currently, the pair is trading at 92.641, up 0.37% as of 5:18 AM UTC.
Last week, the pound had one of its worst weeks in years, after it became clear that UK Prime Minister Boris Johnson would rule out any attempts to extend the Brexit transition period. He managed to achieve this after the UK Parliament voted the second reading of the amended Withdrawal Agreement Bill (WAB). The tight deadline for the trade talks with European leaders might lead to a no-deal Brexit, which worries investors.
Nevertheless, the rupee is also in a difficult position amid India’s ongoing economic slowdown.
At the end of last week, the International Monetary Fund (IMF) chief economist Gita Gopinath said that India’s economy might not experience recovery anytime soon, calling for important reforms, especially in land acquisition and labor market.
She said during the Federation of Indian Chambers of Commerce & Industry (FICCI) annual meeting:
“Our expectation was that the first two quarters of fiscal 2019-20 would be a slowing scenario and then there would be an uptick in the third and the fourth quarter. But, looking at some of the high frequency indicators, we’re not seeing the kind of uptick we were projecting.”
She said that the country was seeing a slowing consumption growth after witnessing a sharp weakness in investment. The IMF will revise the outlook again in about a month.
Elsewhere, rating agency Fitch Ratings cut its GDP growth forecast for India to 4.6% for the fiscal year 2019-2020 from the previous estimate of 5.6%, citing weakening business and consumer confidence.
The Fitch’s outlook is lower than Moody’s projection of 4.9% and 5.1% anticipated by the Asian Development Bank. The Reserve Bank of India (RBI) has also cut the GDP growth forecast to 5% from 6.1% projected in October. Fitch stated in its report:
“We expect growth to gradually recover to 5.6 per cent in FY2020-21 and 6.5 per cent in FY2021-22 with support from easing monetary and fiscal policy and structural measures that may also support growth over the medium term.”