GBP/INR continues to decline in early trading on Monday. The pair started to correct on Friday after updating the highest level in two years. At the time of writing, one British pound buys 97.826 Indian rupees, down 0.01%. The price was ascending a few hours ago, and it might try to recover the latest drop by the end of the session.
From the perspective of fundamentals, the sterling is still in a better position. The UK is reportedly close to reaching a trade deal with Japan while India saw another record increase in coronavirus cases in the weekend.
On Friday, British trade minister Liz Truss revealed that the UK and Japan had reached consensus on key aspects of a post-Brexit trade deal. The two countries plan to sign the deal by the end of August. Truss said:
“Negotiations have been positive and productive, and we have reached consensus on the major elements of a deal, including ambitious provisions in areas like digital, data and financial services that go significantly beyond the EU-Japan deal.”
Meanwhile, British mortgage lender Halifax reported on Friday that house prices had experienced a mini-boom in July, as most of the severe lockdown measures have been lifted. House prices surged 1.6% from June, the biggest increase year-to-date. In annual terms, prices rose 3.8%, the biggest year-to-year increase since January.
Russell Galley, managing director at Halifax, commented:
“Confidence is currently growing, the immediate future for the housing market looks brighter than many might have expected three months ago.”
Still, he stressed that the uncertainty about the impact of the pandemic might put pressure on the housing market in the future.
Business Confidence in India to Lowest Since 1991
In India, businesses and households are pessimistic about their economic prospects given the prolonged lockdown in several states and cities. The business confidence index (BCI) provided by the National Council of Applied Economic Research (NCAER) fell in the first quarter of the fiscal year 2021 to the lowest level since 1991. The BCI dropped by 62% year-on-year, to 46.4 points. In quarterly terms, the index fell 40.1%.
