GBP/INR is trading sideways at the start of the Friday session, after losing 0.90% on Thursday. Currently, one British pound buys 94.858 Indian rupees, down 0.04% as of 6:30 AM UTC. The price found comfortable support near 94.800 and is now making up its mind whether to continue the longer-term downtrend or bounce back.
Yesterday, the Bank of England (BoE) left the interest rate unchanged at 0.1% and didn’t show any inclination toward negative rates. The central bank also boosted the bond-buying programme from 645 billion pounds to 745 billion, in line with analysts’ expectations. However, the pound has weakened on the BoE’s mood to increase stimulus if needed in the near-term future.
Governor Andrew Bailey said that the bank saw clear signs of recovery, though it was too early to give up the QE programme.
“As partial lifting of the measures takes place, we see signs of some activity returning. We don’t want to get too carried away by this. Let’s be clear, we’re still living in very unusual times,” he said.
British Retail Sales, Sentiment Rebound
The pound’s support against the rupee has become even more reliable after Britain’s consumer sentiment and retail sales data.
Earlier today, GfK said that its consumer confidence index for the beginning of June had increased to the highest since March, to -30 from -36 in late May. This is the biggest leap in about four years. The increase was driven by the gradual easing of the lockdown measures.
Nevertheless, GfK warned that the improvement might not necessarily last. GfK director Joe Staton commented:
“With the labour market set for more job losses, we have to question whether we are seeing early signs of economic recovery or that infamous ‘dead cat bounce’. Most bets will be on the dead cat.”
Besides improving sentiment, British retail sales also rebounded. Sales volumes surged in May a record 12.0% after a record decline of 18.0% in April. Economists expected a modest increase of only 5.7%. Core retail sales surged 10.2% versus the expected growth of 4.5%.
However, public sector net borrowing touched a record high, while public sector debt passed 100% of GDP for the first time since 1963.