GBP/INR has retreated from the psychological level of 103.00, but it still maintains a bullish stance. At the time of writing, the pound buys 102.558 Indian rupees, up 0.21% as of 10:40 AM UTC. This is the sixth consecutive bullish session. For the past 16 trading days, the pair has experienced only two negative sessions.
The sterling has been boosted by the hopes that the British economy would recover more rapidly thanks to the massive vaccination program that reached almost one-third of the population with the first shot. Today, a general rally in risk currencies has boded well for the British pound.
The bullishness has to do with a weakening US dollar. Yesterday, US Federal Reserve Chairman Jerome Powell assured markets that higher inflation would not necessarily result in the narrowing of monetary stimulus, as the central bank would keep the policy until the economy was showing clear signs of improvement. Powell’s comments triggered a rally in commodity-oriented currencies, including the Australian and Canadian dollars. The pound has also benefited from the situation.
Lars Sparresø Merklin, a senior analyst at Danske Bank, told Reuters:
“Classical FX havens are weakening (CHF, JPY) and risk currencies such as GBP and NOK are performing well as US rates are now rising in tandem with equities and commodities.”
UK Services Firms Are More Optimistic
Meanwhile, the Confederation of British Industry (CBI) said that UK services firms had seen the biggest improvement in their outlook in over five years. Still, consumer services companies, whose revenue tumbled because of the pandemic, are not optimistic. CBI’s sentiment index among business and professional services firms rose to +23% in the three months to February from -21% in the previous three months. The companies expect the next quarter to record the highest volumes in a year.
UK Prime Minister Boris Johnson said that the government would maintain the current lockdown until late June, but all restrictions might be lifted after that.
CBI economist Ben Jones said:
“While businesses will welcome the clarity on re-opening provided by the government’s road-map, restrictions are chipping away at companies’ resilience, with the majority of firms putting their investment plans firmly on ice for the year ahead.”