GBP/INR is rebounding on Tuesday after slumping about 0.90% yesterday. At the time of writing, one British pound buys 99.112 Indian rupees, up 0.20% as of 9:00 AM UTC.

On Monday, the pair touched the lowest level in about a week. The pound declined as investors analyzed the Brexit trade agreement and realized that the dominant services sector was mostly ignored. Besides this, market participants are worried that the deal secured last week would slow trade.

The sterling has also been dragged down by the worsening of the pandemic. Recently, Britain reported two new COVID strains, both of which are more infectious than the existing COVID virus. Yesterday, the government confirmed over 41,300 new infections, which is a new record.

Yvonne Doyle, Medical Director at Public Health England, stated:

This very high level of infection is of growing concern at a time when our hospitals are at their most vulnerable.

The discovery of the new strains forced the government led by Prime Minister Boris Johnson to impose new strict restrictive measures, including a fresh lockdown in London and southeastern England.

Now the pound tries to recover on the back of the Brexit trade agreement and increasing hopes that the vaccine campaign would contain the virus.

India’s Economy Sees Improvement Amid Unlock Phase

When it comes to India, Asia’s third-largest economy has managed to reduce the spread of the coronavirus. This allows the country to focus on economic recovery. A recent report by the United Nations concluded that India’s economy might turn to be the most resilient in South and South-West Asia over the long term. The upbeat but lower GDP growth after the COVID peak and the large market will continue to attract foreign investments.

The unlock phase carries on, which boosts economic activity. The Federation of Indian Chambers of Commerce & Industry (FICCI) said yesterday that companies continued to observe improvement related to sales and capacity utilization. The main concerns are high managing costs and weak demand.

FICCI said:

“Nearly 50 percent of the companies have reported that they have seen an increase in their order books and about 40 percent have said that their exports have increased. In the August 2020 survey, the corresponding figures were 44 percent and 30 percent, respectively.”