GBP/INR is declining in early trading on Friday, after surging 0.86% yesterday. Currently, the pair is trading at 93.596, down 0.08% as of 6:07 AM UTC.
The pair has entered a correction phase after yesterday’s rally, mainly because the Indian rupee advanced ahead of the economic survey, scheduled for later today, and the Union Budget on Saturday.
On Thursday, the pound jumped against the rupee after the Bank of England (BoE) announced its decision to leave the interest rate unchanged at 0.75%. Investors priced in a 50% chance for a rate cut before the central bank’s meeting.
Interestingly, the pound started to surge one minute before the BoE presented its decision, leading investors to suspect that some participants knew of the bank’s choice before it became public. The BoE said that it had requested the Financial Conduct Authority (FCA) to look into the case. The regulator admitted that it was aware of the situation and was investigating it.
The pound has entered a wait-and-see mode during its last moments as a member of the European Union. Today, the UK is finally leaving the bloc after three painful years of internal debates.
The EU is losing 15% of its economy in an instant. It also loses the largest military contributor and the world’s financial center.
Prime Minister Boris Johnson is expected to hold a speech today, during which he will say:
“This is the moment when the dawn breaks and the curtain goes up on a new act. It is a moment of real national renewal and change. […] This is the dawn of a new era in which we no longer accept that your life chances – your family’s life chances – should depend on which part of the country you grow up in.”
However, the Brexit saga doesn’t end here, as the two sides have to reach consensus on a trade deal within 11 months. European leaders have asked for at least two years of talks, but Johnson ruled out any extension attempt. From now on, the pound will react to every major achievement or failure in the trade talks.
