- Pound (GBP) underpinned by reopening & falling covid cases
- Second stage of reopening on 12th April
- Indian Rupee (INR) edges lower despite upbeat GDP forecasts.
- Exports are expected to pick up in March.
The Pound Indian Rupee (GBP/INR) exchange rate is extending gains for a second day. The pair settled +0.2% higher on Wednesday at 101.29. At 08:45 UTC, GBP/INR trades +0.1% at 101.38.
The Pound showed strength across the board on Wednesday despite few fresh catalysts. With no major macro releases sterling continues to be underpinned by the same factors.
The UK’s rapid vaccine rollout has meant that new daily covid infections have declined and the death toll has also dropped considerably to 190 yesterday.
The UK started on its first steps along its reopening path this week. Provided this stage of reopening goes smoothly and cases stay depressed, then the second stage will commence on 12th April. This is when non-essential retail will re-open and hospitality venues can serve people outdoors, boosting economic growth once again.
The UK economic calendar remains quiet today. Tomorrow sees the release of the monthly UK GDP reading.
According to ratings agency Crisil, India’s GDP will rebound by 11% in FY2022 as business become more flexible and people live with the new normal, flattening the covid curve, vaccine rollouts and investment focus government spending.
Even so, Crisil warned that the recovery is unlikely to be easy with pandemic scarring expected to hit small businesses and the urban poor.
The forecast comes days after the OECD predicted that the Indian economy would grow 12.6% across FY2022 making it the fastest growing economy in the world.
Separately, the Commerce Secretary Anup Wadhawan sounded upbeat regarding exports which are expected to report solid growth in March. Whilst exports were negatively impacted by covid, they have since staged a steady recovery. Exports turned positive in September of 2020 before turning negative again.
February saw exports decline -0.25% to $27.67 billion whilst imports grew 6.98% to $40.55 billion in the same month.
Data for March will be released in April. There is no high impacting Indian data today. Investors await a slew of numbers tomorrow including manufacturing and industrial production along with inflation data.