GBP/INR is bearish in early trading on Wednesday, though the pair continues to maintain within the boundaries of an uptrend that took off on September 23. At the time of writing, one British pound buys 98.843 Indian rupees, down 0.14% as of 7:10 AM UTC. The price faces strong resistance near 99.000.
The sterling is retreating as investors are waiting for more clues about a potential trade deal between the UK and the European Union. On the other side, the rupee benefits from an increase in risk appetite on the back of vaccine optimism, as drugmakers Pfizer, Moderna, and AstraZeneca announced that their experimental vaccines showed positive results in over 90% of cases in their late-stage trials.
Pound Waiting for Brexit Clues
The pound is under pressure after US president-elect, Joe Biden, said that there should be no border between Ireland and the UK, even though the European Union requires some form of a border as part of the post-Brexit deal. Biden emphasized the importance of maintaining Northern Ireland’s peace deal after Brexit. He said that he had discussed with UK Prime Minister Boris Johnson and with European leaders. The Democrat told journalists that “we do not want a guarded border.”
Elsewhere, UK minister Michael Gove said yesterday that the EU must move as well if it wants a Brexit deal. He said:
“I hope that we will be able to secure a good deal with the European Union. The European Union needs to move as well and it needs to acknowledge that we voted to take back control and that’s the most important thing.”
Interestingly, JPMorgan analysts upgraded their odds of a Brexit trade deal to 80% from over 65% in the summer, as negotiations continue.
Besides no visible progress in Brexit talks, investors are also worried about the economic damage caused by the second wave of the pandemic and the national lockdown in England and other regions. Bank of England policymaker Jonathan Haskel said that the UK was about to experience long-term scarring due to the pandemic. He stated:
“Changes in the economy, even if the vaccine comes, will have these long-term scarring effects.”