GBP/INR: Pound Loses Momentum Amid Coronavirus Panic

GBP/INR is declining on Tuesday morning, after six consecutive bullish sessions that sent the price to the highest since October 2018. Currently, the pair is trading at 96.692, down 0.75% as of 5:58 AM UTC. Yesterday, the rate peaked at 97.810 as the rupee couldn’t resist the pressure from crashing oil prices.

Recently, oil prices have recovered some losses, thus allowing the rupee to gain some pips against the pound. Besides, the fear of the coronavirus epidemic in Europe is hurting the confidence of British consumers. Elsewhere, the number of new cases in China, India’s neighbor and trade partner, has dramatically declined.

Oil Prices Slightly Recover

Oil prices increased by over 7% in the morning after losing 25% yesterday. Investors hope that the economic stimulus from central banks and governments would offset the impact of the price war between Saudi Arabia and Russia.

However, many analysts agree that the current uptrend in oil prices is only temporary. OANDA analyst Edward Moya commented:

“Oil’s rally right now will likely be short-lived as the drivers for both the supply and demand side will remain bearish for now.”

Coronavirus Panic Hurts UK Business Confidence

While Indian markets are closed in observance of the Holi festival, the sterling is losing ground amid deteriorating confidence at home. The coronavirus outbreak has wiped out the recent surge in British business optimism. The confidence level has dropped to a six-month low, according to a survey by the Institute of Directors (IoD). One in five respondents said that the epidemic represented a severe threat to their business. IoD chief economist Tej Parikh commented:

“With the prospect of orders drying up and staff in quarantine, some firms will be looking at a potential cashflow crunch, and confidence in the economy has taken a knock.”

Britain’s health service confirmed a fifth person dead from the coronavirus. Despite the panic, the UK government said that it was not yet time to postpone or close mass events. Also, food supplies would continue. The total number of COVID-19 cases increased from 273 on Sunday to 319 on Monday.

Prime Minister Boris Johnson said at a press conference:

“We remain in the contain phase of the outbreak but our scientists think containment is extremely unlikely to work on its own and that is why we are making extensive preparations for a move to the delay phase.”

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