USD/GBP Dollar Gains Strength Over GBP With Falling Price of Oil and Stalling UK Economy
  • Pound (GBP) underpinned by economic reopening
  • BoE Andrew Bailey due to speak later
  • Indian Rupee (INR) traces domestic equities higher
  • Oil prices surge, could limit gains in Rupee

The Pound Indian Rupee (GBP/INR) exchange rate is falling at the start of the week. The pair fell sharply across the previous week shedding -1.6% and settled at 101.28. At 06:45 UTC, GBP/INR trades -0.3% at 100.92.

The Indian Rupee is advancing in early trade, tracing domestic equities higher. The Sensex trades +0.3% whilst the Nifty 50 is up over 0.6%.

The mood in the market is mixed. On the one hand exceptionally strong Chinese trade data is offering support. Chinese exports rose 60.6% year on year in February, well above the 38.9% expected and the 18.1% growth achieved in January thanks to surging demand.

Adding to the positives, the US senate approved the Biden administration’s huge $1.9 trillion fiscal stimulus bill. The bill, which comes as the vaccine programme ramps up as the economy reopens is expected to spur significant growth. For now, the optimism is supporting Indian Rupee. However, should concerns over rising inflation expectations return the Rupee could come under pressure.

Surging oil prices have so far not hindered the Rupee. However, with oil trading at a fresh 14 month high the Rupee could see gains limited.

The Pound is under pinned by declining new daily covid cases, rising vaccination numbers and the reopening of the UK economy. On Sunday, the UK reported 5,177 new covid infections, whilst the death toll increased by 82.

The number first dose covid jabs administered rose to 22.2 million on Sunday. Whilst today marks the first step in the UK economy reopening with schools reopening. A British health official said over the weekend that the reopening plans shouldn’t be derailed by the emergence of new variants of the coronavirus.

Today also sees Bank of England Governor Andrew Bailey give a speech, his last speech prior to the BoE monetary policy announcement. Investors will be listening carefully for any clues on the central banks’ stance towards bond yields, particularly in light of Fed Powell showing little or no concerns of surging yields.

Later in the week the monthly GDP figure for the lockdown month of January will be in focus.