• Pound (GBP) consolidates Friday’s losses, vaccine progress underpins demand
  • UK post Brexit trade concerns linger
  • Indian Rupee (INR) steady despite covid cases hitting YTD high
  • Trade balance & WPI data awaited

The Pound Indian Rupee (GBP/INR) exchange rate is treading water at the start of the new week. The pair shed 0.1% across the previous week, settling on Friday at 101.18. At 07:45 UTC, GBP/INR trades flat.

India reported the largest daily jump in covid cases this year over the weekend. On Sunday India recorded 25,320 new daily infections as the state of Maharashtra prepares to lockdown today. This will be the first lockdown since restrictions were lifted in June.

Concerns of more widespread infections and the potential impact that the lockdown could have on the economy as it continues its recovery could hit demand for the Rupee.

Data at the end of last week was dragging on demand for the Rupee. A sharp jump in inflation to over 5% raised concerns that the Reserve Bank of India could be forced to abandon is supportive policy and hike rates.

Meanwhile industrial production slipped into negative territory in January, contracting 1.6% owing to weak manufacturing, capital goods and mining output.

Today investors will be watching wholesale inflation and India’s trade balance data.

The Pound dropped at the end of last week amid rising concerns over UK trade post Brexi. Data revealed that whilst the UK economy actually performed better than expected at the start of the year trade data was far more worrying.

January’s monthly GDP beat forecasts contracting -2.9%. Expectations had been for a much deeper contraction of -4%. However, trade data revealed a record drop in UK-EU trade reigniting Brexit nerves.

This week, the UK economic calendar is relatively light with just consumer confidence and public data statistics due for release of Friday.

The Bank of England monetary policy announcement on Thursday will be the most important risk event for the Pound this week. The central bank is expected to keep monetary policy unchanged. However, investors will be watching the central bank’s tone carefully. Should investors note a hint of optimism as the UK covid vaccine programme continues and the economy reopens, the Pound could get a boost.