GBP/INR is eyeing the 95.000 level again after failing to consolidate above it at the beginning of the week. Currently, one British pound buys 94.904 Indian rupees, up 0.33% as of 6:40 AM UTC. The larger timeframes show that the sterling is still on the bullish route.
The pound reacted positively on the inflation report published by the Office for National Statistics (ONS). The British consumer price index (CPO) unexpectedly increased in June by 0.6% from 0.5% in May. Economists polled by Reuters expected a decline to 0.4%.
Core inflation, which doesn’t include the prices of food, alcohol, tobacco, and energy, increased to 1.4% from 1.2% in May. Analysts expected no change.
The inflation index was driven by rising prices for clothing and games. On the other side, falling costs of hotels, restaurants, and foods have dragged the index down.
Despite the uptick in prices, inflation remains below the Bank of England’s target of 2%. ONS statistician Jonathan Athow commented:
“The inflation rate has increased for the first time this year, but remains low by historical standards. Due to the impact of the coronavirus, clothing prices have not followed the usual seasonal pattern this year, with the normal falls due to the start of the summer sales failing to materialise.”
The lockdown measures imposed by the British government to curb the spread of the coronavirus sent inflation collapsing from 1.5% in March to 0.8% in April. Prices have gradually recovered since then as the restrictive measures are lifted.
Yesterday, the ONS released data on the UK’s economic performance. Gross domestic product rose 1.8% in May versus April, but the economy still lost 24.5% versus February. Analysts hoped for a more rapid recovery in May.
Rapid Increase in COVID Cases Hinders India’s Recovery
As for India, it continues to struggle with a rapidly increasing number of new coronavirus cases. It hinders the effort for an economic recovery. The Centre for Monitoring Indian Economy said yesterday that the sudden implementation of the lockdown in many regions is blocking the smooth recovery in employment.
“Data of the first two weeks of July suggest that the recovery has stopped progressing beyond its level of the last two weeks of June,” the report reads.
