GBP/INR is in free fall in early trading on Monday. The pair has lost 0.40% as of 5:40 AM UTC, to 92.258. If the current session ends in red, this will be the sixth consecutive bearish day.
The pound has become less attractive to investors after the Bank of England (BoE) hinted to signs of dovishness within its Monetary Policy Committee (MPC). Two out of nine members have already voted to cut the interest rates during the previous two meetings last year. Meanwhile, other members admitted that they were ready to support a rate cut within the next months.
Everything started with BoE Governor Mark Carney, who surprised the market on Thursday by saying that the central bank would cut the rate if the economic weakness persists.
On Friday, MPC member Silvana Tenreyro said she would be inclined to vote for an interest rate cut later this year if the economic growth keeps sluggish.
On Sunday, policymaker Gertjan Vlieghe said he would also support a rate cut at the next meeting later this month. Only an „imminent and significant” improvement would change his mind. Vlieghe told the Financial Times:
„Personally I think it’s been a close call, therefore it doesn’t take much data to swing it one way or the other. I really need to see an imminent and significant improvement in the UK data to justify waiting a little bit longer.”
Elsewhere, the Indian currency has become more confident amid decreasing oil prices, as investors have moved away from the Middle East tensions for a while. Last week, surging crude prices were a burden for the Indian importers.
On Friday, India released its index of industrial production (IIP), which increased 1.8% in November, after three months of contraction. In October, the indicator declined by 3.9%.
Yes Bank chief economist Shubhada Rao commented:
“Overall, IIP is providing early signals of bottoming out of growth slump. This is also in sync with survey-based PMI indicators and our expectation of a mild recovery in the second half of FY20.”
Mining and manufacturing output increased by 1.7% and 2.7%, respectively, in November. However, electricity generation fell 5%.