GBP/INR is attempting a trend reversal on Thursday after two straight bearish sessions during which the pair lost 4.70%. Currently, one British pound buys 86.859 Indian rupees, up 0.35% as of 5:35 AM UTC. During the last seven trading session, the pair tumbled over 11.80%.
Earlier this morning, the price touched the lowest level since mid-August last year. The next support level is at around 85.300, which is the lowest level since August 9.
Both the UK and Indian economies are struggling amid a general panic caused by the coronavirus pandemic. The sterling fell against the US dollar to the lowest level since 1985, while USD/INR surged to an all-time high, showing the biggest single-day gain in many years.
Thus, both currencies show signs of weakness. Still, the sterling is currently slightly bullish because of reasons explained by technical analysis, as the British currency needs some rest after crashing more than 11%.
Rating Agencies Cut India’s GDP Growth Forecast
Recently, Bank of America Securities cut India’s GDP growth forecast for the March quarter by 30 basis points to 4%, as the virus outbreak is causing many businesses to shut down. The brokerage expects the Reserve Bank of India (RBI) to cut the interest rate on or before April 3.
The agency also cut the economic growth forecast for the fiscal year 2020 to 4.7% and FY2021 to 5.1% assuming a 2.2% global growth. However, if the global economy dips into recession, India’s GDP may see a further decline to 4.4% in the fiscal year 2021.
Yesterday, we reported that S&P Global Ratings cut India’s GDP forecast to 5.2% for the fiscal year 2020.
Previously, Nomura, Moody’s and Standard Chartered also downgraded their outlook for India.
UK PM Announces School Closures
As for the UK, the number of COVID-19 continues to expand rapidly. Prime Minister Boris Johnson announced that schools would be closed from tomorrow in an effort to curb the spread of the virus. The PM said yesterday:
“We must apply downward pressure, further downward pressure on the upward curve by closing the schools. After schools shut their gates from Friday afternoon, they will remain closed for most pupils, for the vast majority of pupils, until further notice.”