GBP/INR Likely to Continue Bearish Stance on Wednesday

GBP/INR is taking a break from the bearish mood that has been dominant since last Friday. The pair is currently trading at 1.9168, up 0.07% as of 6:43 AM UTC. The price has been in red in early trading but managed to bounce back. However, bears are still active, so it is not clear whether the pair will manage to end the session with a gain. Most likely, the pound will continue to decline, but much depends on the inflation data due to be released today.

The pound has been under pressure since UK Prime Minister Boris Johnson, whose secured a historic victory in the UK election on Thursday, announced his intention to rule out any extension of the Brexit transition process. Currently, the deadline for the so-called Brexit implementation is set for December 2020. The PM will put the amended Withdrawal Agreement Bill (WAB) to the vote on Friday. The bill is likely to obtain the parliament’s nod as the Conservative Party has the majority.

Analysts fear that Johnson’s rigid timeline opens the door to a no-deal Brexit, which could have negative consequences on the UK economy. In fact, that is the worst-case scenario that economists are worried about.

Some European officials said that it would be impossible for the two sides to reach consensus on all matters within 11-months from January 31, when Brexit will take place officially.  Sabine Weyand, the EU director-general for trade, said that the bloc had to focus on the most critical issues. She commented:

“I think given all the signals we are getting, we are well advised to take seriously that the UK does not intend to go for an extension of the transition and we need to be prepared for that. And that means that, in the negotiations, we have to look at those issues where failing to reach an agreement by the end of 2020 would lead to another cliff-edge situation.”

Elsewhere, the Indian rupee has been supported by news that the US and China finally agreed last week to sign the phase one trade deal. Washington gave up the new tariffs that were set to take effect on December 15. On the other side, China pledged to buy US farm goods, among other conditions.

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