GBP/INR has been moving sideways since Monday, after failing to maintain above 93.000.
Currently, GBP/INR is trading at 92.928, down 0.06% as of 6:20 AM UTC.
If the sterling fails to break the current resistance, then it might see another downtrend for the next few days. The pair has tried to break a resistance at about 93.300 for a second time, after failing to do so last Friday. Thus, the price has formed a double top pattern, which might anticipate a bearish move.
India’s GDP Growth Likely Below 5%
The main topics impacting the pair are the coronavirus epidemic and the post-Brexit trade talks between Britain and the European bloc.
Besides this, the rupee is waiting for the Indian economy to show any signs of revival after the central bank has cut its interest rate several times last year while the government boosted stimulus. Earlier today, a Reuters survey showed that India’s gross domestic product (GDP) has likely accelerated in the three months to December after its worst performance in six years in the previous three months.
Annual GDP likely increased to 4.7% from 4.5% in the three months to September. The overwhelming majority of polled economists agree that growth for the December quarter was at 5% or below.
Barclays stated in their recent weekly report:
“A modest recovery in the agriculture sector, coupled with a normalisation in weather conditions amid elevated government spending likely pushed growth higher.”
Nevertheless, the revival effort might be hit by excessive inflation, which surged to 7.59% in January.
Sakshi Gupta, a senior India economist at HDFC Bank, said that the economy was way below its potential.
“Even the lead indicators don’t seem to be entering a more sustainable phase of economic recovery right now, or at least in the near future,” she concluded.
The Reserve Bank of India (RBI) would have cut the interest rate again, but it can’t do this because of the high inflation, leaving the economic support in the hands of the government. Because of this, Gupta is not too optimistic about potential healthy growth in the economy.
“We are looking at a very slow and gradual recovery by the end of the year but not in the near-term,” she said.