GBP/INR is advancing on Friday, as the markets expect the UK Parliament to vote Prime Minister Boris Johnson’s amended Withdrawal Agreement Bill (WAB) later today.
Currently, the pair is trading at 92.683, up 0.12% as of 6:30 AM UTC. The price is fluctuating very close to the December low after having a bearish week that offset all the election gains. The pound has been under pressure after the Johnson voiced his intentions to make any extension of the Brexit transition deadline illegal. Investors fear that this might lead to a no-deal Brexit, given that it’s unlikely that the UK and the European Union will reach a favorable trade deal within 11 months after the exit happens on January 31.
The pound found some support earlier today after research firm GfK said that confidence among consumer and businesses increased to the highest level in five months. The indicator rose to -11 in December from -14 the previous month, while analysts expected no change.
Elsewhere, a survey prepared by Lloyds Bank showed that the business confidence increased to the highest level since July at 10%, up 1% from November.
It’s worth mentioning that both surveys were carried out before the election on December 12, in which Johnson won a historic victory, securing a majority in parliament.
Joe Staton of GfK commented:
“Despite official warning signs about the flatlining of Britain’s economy, we know that record-high employment and below-target levels of inflation are helping to boost consumers’ expectations for the year ahead.”
Lloyds Bank analysts said that businesses were more optimistic about trade prospects.
Lloyds’ senior economist Hann-Ju Ho explained:
“There is now clarity over the UK’s departure from the EU, but the focus will turn to whether a new trade agreement can be negotiated during the transition period which currently runs until the end of next year.”
Yesterday, the Bank of England left the interest rate unchanged at 0.75% with a 7-2 vote, in line with analysts’ expectations.
The UK is set to report gross domestic product (GDP) growth data in a few hours, which will likely shake the GBP/INR pair.
Earlier today, Indian Prime Minister Narendra Modi said that his government had ensured a solid foundation for the $5 trillion economy. Before 2014, the economy was heading towards disaster, but the government stopped it and brought discipline, Modi noted.
