GBP/INR is extending the downtrend on Monday, losing all gains since June 4. At the time of writing, one British pound buys 94.904 Indian rupees, down 0.40% as of 6:10 AM UTC. Last week, the price peaked near 97.000.
On Friday, the UK released a series of economic data revolving around its economic performance. It hinted to a more dramatic recession than what most analysts expected.
Besides this, the sterling continues to be under pressure amid Brexit pessimism. Britain and the EU still can’t reach consensus on many issues as part of their trade talks. Prime Minister Boris Johnson is about to join a video conference with EU leaders later today. However, European officials have low expectations for any progress.
A senior official said:
“No one expects any breakthrough unless Boris Johnson decides to surprise us. This meeting was scheduled in the withdrawal agreement, so it is happening but no one expects much.”
After leaving the EU at the end of January, the UK and the bloc still remain apart on key issues like fishing rights, fair competition guarantees, and the Irish border. The government led by Boris Johnson ruled out any possibility to extend the negotiations into the next year. The UK confirmed last week that it had no plans to prolong the transition period despite the disruptions caused by the coronavirus pandemic.
India’s Industrial Production Shows Record Decline in April
The pound cannot leverage the increasing optimism among consumers as the British economy is reopening gradually. It continues to decline against an already weakening rupee.
On Friday, the Indian government said that industrial production tumbled by a record 55.5% in April, as the country has implemented strict lockdown measures that paralyzed the economy. Manufacturing crashed 64.3%.
India’s ministry of statistics & programme implementation skipped the publication of retail inflation data due to the pandemic but said food inflation rose 9.28% year-on-year in May.
The ministry’s National Statistical Office explained:
“In view of the preventive measures and announcement of nationwide lockdown by the government to contain spread of Covid-19 pandemic, majority of the industrial sector establishments were not operating from the end of March 2020 onwards.”
