GBP/INR is ending the week on a positive note, though it has recovered only half of the losses experienced last week. Currently, the pair is trading at 92.969, up 0.21% as of 5:50 AM UTC.
Yesterday, the United Nations published its World Economic Situation and Prospects (WESP) 2020, according to which the gross domestic product (GDP) growth in India and a few other emerging countries would see some acceleration this year after the global economy noted the slowest growth last year at 2.3%. The main factors that dragged down the global economy were trade tensions.
However, the UN lowered its forecasts for India economy’s current and next fiscal years. Thus, it reduced its GDP growth outlook to 5.7% in the current fiscal year, down from 7.6%. For the next year, the UN expects India’s economy to grow at 6.6%, down from the previous outlook at 7.4%.
As per the UN study, about 20% of the world economies will note per capita income stagnate or decelerate this year, but India will be among few countries where per capita GDP growth might exceed 4%. Again, for India, such growth is not a big deal, given that it used to report two-digit figures in economic growth in the previous years.
The Indian economy has been struggling for the last months, posting the lowest quarterly and annual GDP growth in about six years. The government and central bank have implemented a series of stimulus measures, but nothing seems to give the desired results.
Elsewhere, the pound is trying to recover last week losses caused by the Bank of England’s (BoE) dovishness and disappointing economic data. Several BoE policymakers recently said that they were ready to support a cut in the interest rate, citing weak economic growth. Nevertheless, a Reuters poll published earlier today found that the central bank will likely maintain the rate unchanged at its next meeting on January 30, ahead of the UK’s withdrawal. However, there is a visible chance it will favor a rate cut.
60 of 68 respondents, who were surveyed from January 13 to 16, said that the BoE would keep the rates steady while giving a median 35% chance the policymakers will cut rates.
Nomura’s George Buckley commented:
“We changed our call to a 25 basis point January rate cut just over a month ago in early December, and that call has clearly gained a lot of traction over recent weeks.”