- Pound (GBP) declines despite BoE’s Bailey upbeat comments
- Thursday BoE MPC in focus
- Indian Rupee (INR) rises even as covid cases grow
- Trade deficit narrowed to $12 billion
The Pound Indian Rupee (GBP/INR) exchange rate is moving lower for a third straight day. The pair settled down +0.47% at 100.79 in the previous session towards the low of the day. At 08:45 UTC, GBP/INR trades -0.4% at 100.33.
The Indian Rupee managed to advance despite growing concerns over resurgent covid. India experienced its highest number of new daily cases so far this year and parts of the country are going back into lockdown.
Indian’s trade deficit narrowed in February to $12 billion from $14 billion in January. Exports in February declined by 0.67% to $27.93 billion on weaker demand and container shortages. Imports, on the other hand, grew 6.96% to $40.54 billion according to the latest data from the commerce ministry. Whilst oil deficit eased, the deficit of non -oil merchandise widened.
The Pound briefly found some support on Monday from comments made by the Bank of England Governor Andrew Bailey over the state of the British economy.
Speaking to BBC Radio 4 Andrew Bailey confirmed that the impact of covid and the covid lockdown restrictions on the economy had been huge. However, he struck a more upbeat tone saying that this hit to the economy was easing. Andrew Bailey said that he forecasts that the UK economy will return to its pre-pandemic size by the end of 2021. Meanwhile he expects inflation to pick up to 2% over the coming months.
The BoE will have moved almost 180 degrees from almost implementing negative interest rates to considering raising interest rates, all in a short period of time. Thanks to the rapid vaccine rollout, expectations for a strong UK economic recovery have risen.
As from Monday 24 million people in the UK have had their first covid vaccine. However concerns regarding the AstraZenena vaccine are dragging on the Pound.
Today and tomorrow the UK economic calendar is light. Instead, investors will turn towards Thursday’s BoE monetary policy decision.
