- Pound (GBP) supported by BoE Andrew Bailey’s inflation comments
- Declining covid numbers underpin sterling
- Indian Rupee (INR) traces domestic equities higher
- Oil prices edge higher after falling from 2 year highs on Monday
The Pound Indian Rupee (GBP/INR) exchange rate is moving lower snapping a two day winning streak. The pair settled +0.1% higher at 101.39 on Monday towards the upper end of the daily traded range. At 07:45 UTC, GBP/INR trades -0.2% at 101.202.
The Indian Rupee is tracing the domestic equity market higher. A the time of writing the Sensex trades +0.75% higher and the Nifty 50 also trades up over 0.7%. Gains in financial led the charge higher, overshadowing losses in energy stocks.
Oil prices are on the rise which is likely to limit anu gains. Oil prices pushed higher recovering from a deep selloff on Monday on expectations of a recovery in global demand following the Senate passing the Biden Administration’s $1.9 trillion stimulus package.
Bank of England governor Andrew Bailey helped lift the Pound on Monday when he signaled some concern over the possibility of rising inflation as the UK recovers from the covid pandemic. Mr Bailey pointed out that risks are increasingly two sided. Although, the Governor of the BoE did also confirm that the central bank would need to see a sustained move above the 2% target inflation level in order to raise interest rates.
Whilst up until earlier this year negative interest rates were the dominant central bank concern, the market no longer expects the BoE to use negative rates. Instead, expectations are for a rate hike next year.
As covid cases continue to fall and the UK economy begins to reopen the outlook for inflation appears to be picking up, supporting the Pound.
The number of new covid cases in the UK fell to the lowest level since last September yesterday. Government data revealed that 4,712 people tested positive for Covid 19. The data also revealed that there were 64 deaths.
The UK economic calendar sees the release of British Retail Consortium like for like sales for February which could be quite weak considering lockdown conditions.