GBP/INR continues to decline on Thursday, after losing 0.54% on Wednesday. Currently, the pair is trading at 92.347, down 0.15% as of 6:05 AM UTC.
The next support level that may resist bears is at around 92.000.
Indian rupee reacts to China’s interest rate cut
The Indian rupee has reacted positively on China’s decision to cut the interest rate, in line with analysts’ expectations. China’s government is forced to ease the policy to support an economy that struggles with the coronavirus outbreak.
The one-year loan prime rate (LPR) was reduced by 10 basis points to 4.05% from 4.15%. The five-year LPR was cut by 5 basis points to 4.75% from 4.80%.
The move follows the central bank’s decision at the beginning of this week to cut the medium-term lending rate.
The lower rates trigger hopes that the economy will gain momentum, which bodes well for India as well. However, the LPR cut may not be enough to address the virus consequences. Mayank Mishra, macro strategist at Standard Chartered Bank in Singapore, commented:
“The Chinese authorities are sending a message that easing will happen, but it will happen at a measured pace. They do not want fuel expectations that they will be easing aggressively.”
China reported the fewest new virus cases since January, but the sentiment is subdued because of fresh worries in South Korea, where dozens of members of a church have contracted the virus.
While India is not worried about a direct threat of the virus, the country might be affected by the slowdown in global GDP and trade. This is the conclusion of Shaktikanta Das, governor of the Reserve Bank of India (RBI).
Only a number of sectors in India may see some disruptions, the governor said. Thus, the government is already exploring alternatives to overcome those issues.
Growth in UK Wages Slow Down
Elsewhere, the sterling has been under pressure after XpertHR said that UK employers offered the lowest annual pay awards in over a year in the three months to January. Thus, the growth in wages slows despite a low jobless rate.
The annual pay rise offered to workers in the three months to January declined to 2.1% from 2.2% in the fourth quarter of 2019.
XpertHR analyst Sheila Attwood said:
“With January generally setting the tone for much of the rest of the year, we now expect employers to continue to exercise caution when making their pay awards, and for low pay awards to prevail over the coming months.”
