GBP/INR has declined in early trading on Thursday, but it bounced back only a few minutes ago. Currently, one British pound buys 94.100 Indian rupees, up 0.22% as of 6:05 AM UTC. The pair fell to a daily low at 93.670, showing a decline of over 0.15%.
The price continues to trade within a sideways channel that started at the end of March. It has been trying to break below a strong support level near 93.500. However, the sterling rebounded after the Bank of England (BoE) released its interest rate decision.
Bank of England Maintains Rate at 0.1%
Earlier this morning the BoE maintained the interest rates unchanged at 0.1%. Nevertheless, the central bank expressed its readiness to expand its stimulus if the economic crisis is getting worse. In March, the BoE took unprecedented measures to support the economy amid the coronavirus pandemic, which has killed over 30,000 people in the UK alone.
All nine members of the BoE’s Monetary Policy Committee (MPC) voted to keep rates at previous levels. As for the quantitative easing program, seven members voted to carry on with the £200 billion plan, bringing the bond-buying program to £645 billion.
The central bank said:
“The MPC will continue to monitor the situation closely and, consistent with its remit, stands ready to take further action as necessary to support the economy and ensure a sustained return of inflation to the 2% target.”
The outbreak will result in the worst economic recession in centuries. The BoE said that it expected a steep contraction in the gross domestic product (GDP) for the first half of 2020 along with a significant surge in unemployment. Nevertheless, if the lockdown measures are lifted relatively soon, the central bank anticipates a recovery.
The report reads:
“Nonetheless, because a degree of precautionary behavior by households and businesses is assumed to persist, the economy takes some time to recover towards its previous path.”
The UK government led by Prime Minister Boris Johnson will announce the final decision of its second review of social distancing measures later today. Interestingly, the UK has the highest fatality rate in Europe.
