GBP/INR continues to decline on Thursday, after losing 0.22% on Wednesday. Currently, one British pound buys 92.362 Indian rupees, down 0.11% as of 6:55. Earlier this morning the price touched a daily low at 92.102. The last two bearish sessions show that the pair hasn’t managed to reverse the longer-term downtrend that started on April 15. The next support level is at about 91.600, which is the lowest since March 27.
The pound is slipping amid increasing tensions over the Brexit negotiations and as the Bank of England (BoE) is thinking about potential negative interest rates for the first time ever.
The UK said yesterday that there was no need for new customs infrastructure in Northern Ireland. However, it was ready to implement checks on some goods traded from the mainland to the province.
Britain left the European bloc on January 31 but it still has to negotiate a trade deal by the end of this year. Northern Ireland, which is part of the UK but also has a land border with the EU member Ireland, was the cause of debates for years. The EU wanted a strict border while Britain said there was no need for that. Eventually, UK Prime Minister Boris Johnson agreed to a so-called protocol. The latter requires strict customs checks and tariffs on some goods coming from the mainland in the case they are planned for the EU members. But now the UK wants to skip most of that.
Irish Foreign Minister Simon Coveney said that Britain’s proposal to ignore a new customs infrastructure will be met with skepticism by EU leaders.
BoE Doesn’t Rule Out Slashing Rates Below Zero
Meanwhile, the pound has also reacted to the BoE’s comments that negative interest rates might be on the horizon. BoE Governor Andrew Bailey said he was now less opposed to negative rates than before the pandemic. However, he admitted that there was a debate among policymakers about the long-term risks.
Bailey told parliament on Wednesday:
“(We’re) looking very carefully at the experiences of those other central banks that have used negative rates, and a number of them are actually publishing quite interesting assessments at the moment. There are some pretty mixed reviews of it, I have to say.”