GBP/INR is retreating in early trading on Wednesday, after surging 1.26% yesterday. Still, the pair has managed to consolidate above 97.00 at least for now. At the time of writing, one British pound buys 97.135 Indian rupees, down 0.31% as of 7:20 AM UTC. On Tuesday, the price hit the highest level since the beginning of September by exceeding the 98.00 level.

The decline in rupee has to do with the US election. Americans voted on Tuesday between current President Donald Trump and Democrat challenger Joe Biden. The rupee dropped to the lowest in two months against the pound and other majors as the election results point to uncertainty, while most polls have previously suggested a confident win for Biden. The prospects of a tight race triggered a rally in most equities in emerging markets like India, while putting pressure on national currencies.

Sterling Dragged Down By Brexit Pessimism, Surging COVID Death Toll

Nevertheless, the pound has lost some earlier gains as investors have calmed down and got back to the broader fundamentals. The UK and the EU still cannot reach consensus on a post-Brexit trade deal amid extended talks. Also, Britain reported another record surge in COVID-related deaths, which supports the case for a national lockdown in England set to begin at the end of this week.

On the Brexit front, the two sides don’t make any visible progress even though the gaps have narrowed. Irish Foreign Minister Simon Coveney said that the progress made was not enough. He commented:

If there is not a basic set of rules around fair competition… and if there is not a governance structure that can deal with disputes, then in my view there will not be a trade deal. There is some progress being made in this area but it’s far from concluded yet.”

Rupee Leverages India’s Services PMI

The rupee has found some support after Markit reported that India’s services sector expanded in October for the first time since the lockdown was imposed in March. Business activity and new work were boosted by easing restrictions. The IHS Markit India services purchasing managers index (PMI) rose last month to 54.1, from 49.8 in September. Previously, the indicator showed contraction for eight straight months.