GBP/INR is declining in early trading Friday, but it continues to move sideways on larger timeframes. The pair is set to end the week slightly lower. At the time of writing, one British pound buys 96.049 Indian rupees, down 0.08% as of 7:20 AM UTC.
Investors still focus on the extended Brexit talks and the surging COVID cases in the UK. Meanwhile, India seems to be containing the virus.
The pound has benefited from some cautious optimism surrounding a potential post-Brexit trade deal between Britain and the EU. However, that optimism is fading as there is still no visible progress. European Commission President Ursula von der Leyen said yesterday following a video conference with Canada’s Prime Minister Justin Trudeau that fisheries and state subsidies rules are the two main issues.
Von der Leyen said:
“We are making good progress but the two critical issues, level playing field and fisheries, there we would like to see more progress. We are now deep into how we would construct a system that is fair for both sides … which is a sine qua non for the UK to have access to the single market that is tariff free and quota free.”
Nevertheless, the EC President made some positive comments, saying that negotiations made some good progress.
Second Wave Might Hit UK Economy Even Harder
The pound is under pressure as the pandemic is getting from bad to worse in the UK, which saw a 23% increase in infections during the week. Meanwhile, the furlough scheme ends this weekend and the next job protection programme is less generous. Economists are worried that the second wave would leave no traces of recovery.
Earlier today, Nationwide data showed a recovery in the housing market, but that will end soon as well. British house prices rose at the fastest pace in about six years in annual terms in October, by 5.8% from 5.0% in September. Analysts expected an increase of 5.2%.
Still, according to Robert Gardner, Nationwide’s chief economist, “activity is likely to slow in the coming quarters, perhaps sharply, if the labour market weakens as most analysts expect, especially once the stamp duty holiday expires at the end of March.”
In India, the eight key infrastructure industries contracted for the seventh consecutive month in September, though the pace has slowed. Output at infrastructure industries fell 0.8% last month, compared to a 7.3% decline in August.