- Pound (GBP) supported by BoE
- Public sector net borrowing data in focus.
- Indian Rupee (INR) rises despite surging covid cases
- WTI trades 7% lower across the week
The Pound Indian Rupee (GBP/INR) exchange rate is edging lower for a second straight session. The pair settled -0.1% lower at 101.18 on Thursday. At 08:45 UTC, GBP/INR trades -0.2% at 100.94. The pair is heading for -0.2% loss across the week.
As was widely anticipated, the Bank of England kept monetary policy unchanged on Thursday. Interest rates remain at the historically low level of 0.1% and the bond buying programme at £895 billion.
The central bank upgraded its outlook for the UK economy, thanks to the not as bad as feared Q1 GDP reading, the start of reopening the economy and the extension of covid support by the Chancellor Rishi Sunak in his Budget. The BoE believes that consumption will increase at a faster rate in Q2.
At the same time the BoE stressed that they are in no hurry to tighten policy and remove supportive measures. Although the bank was encouraged by the pickup in the economy they remain very cautious.
Looking ahead attention will now shift to the public sector net borrowing data due to be released shortly.
The Rupee is shrugging off growing concerns that the Reserve Bank of India may need to push back the start of monetary normalization by 3 months amid a resurgence in covid.
In September India was experiencing nearly 100,000 new cases a day, this number declined dramatically but is once again on the rise. India reported 35,871 new daily covid cases on Thursday, its highest level in 3 months.
Given the rise in cases and the expected tightening of restrictions monetary policy normalization could be pushed back by a quarter.
Attention will now turn to the release of foreign exchange reserves by the Reserve Bank of India.
Offering some support to the Rupee has been falling oil prices. West Texas Intermediate trades down some 7% across the week.