GBP/INR has been bearish in early trading on Tuesday. Currently, the pair is trading at 92.846, down as of 0.81% as of 7:00 AM UTC.
The pair couldn’t consolidate above 94.000 yesterday, and eroded some of the previous gains. Nevertheless, there is still more room for bears since GBP/INR gained about 7% last week.
UK Economy Showed No Growth in Q4
The pound extended its decline after the Office for National Statistics (ONS) said in the morning that the growth in UK’s gross domestic product (GDP) was flat in the last quarter of 2019, in line with analysts’ forecasts. This suggests that the economy was slowing down even before the COVID-19 pandemic hit the British economy.
The UK GDP expanded by 1.1% year-on-year in the final three months of 2019. Investors hoped that Prime Minister Boris Johnson’s major victory in the December election would have helped the economy rebound, especially after early signs of an uptick in confidence among businesses and households.
The ONS said that the economy rose 1.4% for the year, up from 1.3% in 2018, even after growth in the first quarter was revised upward to 0.7%.
Rob Kent-Smith of the ONS commented:
“Growth in services was offset by a drop in construction and yet another fall in manufacturing. Household spending also saw no growth in the last three months of the year while business investment continued its recent weak path, with a decline at the end of 2019.”
The economic growth in the first quarter of this year is expected to be hit by the coronavirus outbreak, which caused the UK government to implement social distancing measures and shut down businesses. However, the true extent of the crisis will show up in the second quarter.
Earlier today, the Centre for Business and Economic Research said that the country is moving towards its deepest recession since the 2009 crisis. The economic output will tumble by 15% between the first and second quarters.
As for the Indian economy, it has been struggling with the virus outbreak as well. Rating agencies, including Fitch and S&P, cut their GDP growth forecasts even further to reflect the impact of the recent lockdown measures.