GBP/INR is ascending in early trading on Tuesday. At the time of writing one British pound buys 95.288 Indian rupees, up 0.44% as of 6:40 AM UTC. The pair is now breaking a key resistance level near 95.200, which is the highest since September 30. The next resistance is near 95.600. All in all, the British currency is gradually recovering losses incurred at the end of September.
In India, services sector activity stabilized last month amid easing restrictions, but that doesn’t help the rupee. Despite the recovery, services employment fell for the seventh consecutive month and at a quicker pace than in August. India’s Services Business Activity Index, as released by IHS Markit, increased for the fifth month in a row in September, to 49.8 from 41.8 in August.
Sterling Up on Cautious Brexit Optimism
The sterling is supported by Brexit optimism, as the UK and the EU have reached the 24th hour to reach consensus on a trade deal. Investors reacted to a Monday report by Goldman Sachs, according to which the two sides would likely ink a deal by early November. Still, the bank didn’t rule out the risk of a no-deal divorce. Goldman analysts stated:
“Our core view remains that a “thin” zero-tariff/zero-quota trade agreement will likely be struck by early November, and subsequently ratified by the end of December. The risk of a breakdown in negotiations cannot be ruled out. We continue to think the perceived probability of ‘no deal’ will persist beyond the next European Council meeting in mid-October.”
The UK left the bloc at the end of January 2020, having to reach a deal by the end of this year. The COVID pandemic has disrupted negotiations, but the main factors hindering the agreement are the sensitive topics, such as fisheries or the border with Northern Ireland.
It remains to be seen if the UK continues with its Internal Markets Bill, which overrides parts of the current treaty with the EU and which has to pass through the upper house of the UK parliament.
As for the UK economy, the recovery continues, though the newly introduced restrictive measures can impact the pace. Yesterday, Britain reported 12,594 new coronavirus infections, down from Sunday’s 22,961 when authorities said the surged was caused by a technical problem.
