GBP/INR bounces back on Thursday, after showing a 1.1% nosedive yesterday. Currently, the pair is trading at 92.733, up 0.40% as of 7:30.
Indian Economy Likely to Show Flat Growth in Q4 FY2020
The rupee has to face more pressure after economists at the State Bank of India (SBI) concluded that the Indian economy had likely shown no progress in the fourth quarter of the fiscal year 2020. India’s gross domestic product (GDP) is expected to have grown at a rate of 4.5%, the same pace as in the third quarter. However, other economists hope for a more decent growth amid an increase in government spending and agriculture activity.
While India’s economy has been struggling with domestic problems, it might also be affected by the coronavirus outbreak, given that it has strong trade ties with China. Yesterday, finance minister Nirmala Sitharaman said that the government was monitoring the impact of the virus on the economy. She also commented on the ongoing process of merging 10 state-run banks into four bigger entities.
UK to Reveal Post-Brexit Goals
Elsewhere, the sterling is advancing in anticipation of UK’s post-Brexit trade goals. The European Union approved a mandate on the trade talks on Tuesday, and now it’s time for the British side to present its stance. Experts say that UK Prime Minister Boris Johnson will put the country on a collision course with the bloc.
While European leaders said that no deal would be green-lighted unless the UK agrees with a level playing field, Johnson strives for total independence and is seeking a Canada-style relationship. However, even an arrangement like Australia, which has no free trade agreement with the EU, would be Ok for Britain, according to Johnson’s spokesman James Slack.
The trade talks will start next Monday.
Economists also worry about the tight timeline for trade negotiations. Earlier this week, EU’s Brexit negotiator Michel Barnier said that the bloc wouldn’t accept a trade deal “at any price,” stressing that the UK should expect “complex, demanding negotiations” over a short period.
“A short time, as chosen by the British government, not by us. In a very brief period, you can’t do everything. We will do as much as we can under pressure of time,” the official added.