GBP/INR ends the week on a bearish note, after two straight bullish sessions. Currently, the pair is trading at 93.919, down 0.79% as of 6:40 AM UTC.
The price action is driven by reasons explained by technical analysis, as there are very few changes in the fundamentals to look into at the moment. On April 1, the price couldn’t break above a strong resistance line and psychological level at 95.000 and has declined since then. Now it is testing a decent support level at 94.000 and might bounce back.
So far, the price is still following a medium-term uptrend that took off on March 19. The pair has gained about 10% since then. However, if it breaks below 94.000 in the following hours, we might see a trend reversal.
Coronavirus Pandemic Froze the Economy
From the perspective of fundamentals, the main subject of interest is the COVID-19 pandemic, which hit both the UK and Indian economies.
Yesterday, the Bank of England announced that it would double the scale of its corporate bond purchase programme to about 20 billion pounds. The central bank said:
“(The BoE) expects to make these purchases at a significantly faster rate than in the 2016 scheme.”
Obviously, the BoE said it would invest in a “balance portfolio of bonds across eligible issuers and sectors” and will not support specific firms. The list of companies will be updated next week. Bonds issued by banks, insurers, and building societies will not be reviewed.
Britain’s economy will continue to be affected in the coming weeks, as the death toll continues to increase. Yesterday, the UK government reported another record number of fatalities, with 596 deaths confirmed in the previous 24 hours.
As for the Indian economy, it is also on hold amid the lockdown measures imposed by the government at the end of last month. Earlier Friday, the Asian Development Bank (ADB) said that India’s gross domestic product (GDP) was likely to decelerate to 4% this fiscal year. ADB President Masatsugu Asakawa commented:
“We face extraordinarily challenging times. The outbreak of coronavirus (COVID-19) is disrupting people’s lives and interrupting business and other economic activities around the world.”
