GBP/INR is extending the rally, after breaking on Friday above the resistance level at 95.000. Currently, one British pound buys 95.105 Indian rupees, up 0.33% as of 6:30 AM UTC.
The rupee continues to be under pressure as the number of coronavirus cases doesn’t slow down. Earlier today, India reported another record increase in COVID infections, adding over 28,700 new cases during the previous 24 hours. Globally, the World Health Organization reported on Sunday a record daily figure, as the total number of infections exceeded 13 million.
Authorities in several Indian cities are returning to strict lockdown measures, which might hurt the economy. New Delhi, Bangalore, Mumbai, Chennai, and Pune have all noticed a rapid increase in new cases.
The Federation of Indian Chambers of Commerce and Industry (FICCI) said yesterday that the country’s gross domestic product (GDP) would contract 4.5% in the fiscal year 2020-21. The industry body said that the rapid spread of the coronavirus is worsening the economic and healthcare crisis. In January, FICCI predicted a 5.5% economic increase.
On Saturday, Reserve Bank of India Governor Shaktikanta Das said that the country’s economy has shown some signs of recovery as restrictions started to ease in June. However, he added that it was still uncertain “when supply chains will be restored fully; how long will it take for demand conditions to normalise; and what kind of durable effects the pandemic will leave behind on our potential growth.”
UK Will Suffer Biggest Contraction Among Major Economies
Elsewhere, the UK would experience the sharpest peak-to-through economic decline among developed economies, Moody’s said last Friday. Moreover, the coronavirus crisis would increase national debt as a share of GDP by about 24%.
“We forecast a contraction of 10.1% in the UK’s GDP for this year, but expect a gradual subsequent recovery on the back of the easing in lockdown measures, with growth rebounding to 7.1% next year,” the agency said.
Moody’s noted that the government’s 30 billion pound stimulus, announced last week, would help a gradual recovery, but weigh on the country’s fiscal position.
Fitch, another top rating agency, downgraded its GDP forecast for the UK to reflect a 9% contraction this year, after projecting a 7.8% decline in its last outlook.
