GBP/INR has returned to growth as we anticipated yesterday. The pound benefits from COVID vaccine hopes and the general bullishness around fresh stimulus from the European Union and potentially from the US. On the other side, India is struggling with an increasing number of coronavirus cases. Many local regions and cities are forced to continue or reimpose the strict lockdown measures.
At the time of writing, one British pound buys 95.103 Indian rupees, up 0.53% as of 7:10 AM UTC. Yesterday, the pair gained over 0.50% as well, after flashing red in the morning. Thus, the price has recovered the losses incurred last week. It is currently trading close to the monthly high touched on July 13. If it manages to break above 95.400, it may open the door to next resistance lines and potentially consolidate above 96.000 for a while.
The sterling might be dragged down by the post-Brexit uncertainty and disappointment that a V-shape recovery is not evident.
German Foreign Minister Heiko Maas said earlier today that the goal of reaching an agreement between the UK and the EU by October is ambitious, though still possible.
UK Economy Recovered Half of March-April Decline
As for the depth of the crisis, Bank of England (BoE) chief economist Andy Haldane said yesterday that the gross domestic product (GDP) had recovered around 50% of its collapse from March-April. He told the parliament:
“Roughly half of the roughly 25% fall in activity during March and April has been clawed back over the period since. We have seen a bounceback. So far, it has been a ‘V’. That of course doesn’t tell us about where we might go next.”
Even though Haldane mentioned a V-shaped recovery, the Office for National Statistics reported last week that the GBP gained only 2.8% in May, while analysts expected a 5% increase.
Meanwhile, the UK is aligning with the US in the Hong Kong matter, which means tenser relationships with China. Britain is suspending its extradition treaty with the former colony as Beijing is introducing its new legislation there. Foreign Secretary Dominic Raab said:
“The imposition of this new security legislation has significantly changed key assumptions underpinning our extradition treaty arrangements with Hong Kong. The government has decided to suspend the extradition treaty immediately and indefinitely.”
