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Rupee turns lower, GBP/USD under pressure

Thursday,   10-Jan-2019   12:34 PM (IST)

The Indian rupee turns lower and is currently quoted 70.49/50 levels (12:24 pm) in the afternoon deals after touching the low of 70.60/61 levels due to dollar buying by foreign banks and importers. Rupee rose to 70.3350/3450 levels in early trade today, as increased expectations following the Federal Reserve’s latest meeting minutes that it may pause rate tightening cycle outweighed the impact of an uptrend in crude oil prices. The benchmark indices opened with minor gains, but soon fell into the negative territory. Sensex falls 100 points, while Nifty trading below 10,850. As per the technical indicators, range for USDINR pair for the remaining part of the day may be 69.90 -70.85 levels. Rupee has an immediate support at 70.62 levels. A breach of the same may see rupee at 70.74 followed by 70.89 and 71.03 levels. On the positive side rupee is likely to face resistance at 70.36 levels and if it is able to break the same then it may gain up to 70.21 levels followed by 70.09 and 69.97 levels. In the forward segment 1mth, 3mth and 6mth annualized premia are currently trading at 3.97%, 4.09% and 4.11% respectively.

GBP/USD is trading tightly with recent peaks, shuffling feet near 1.2780 as the Cable continues to mix just beneath the critical 1.2800 handle, with Brexit concerns back in full view and a dovish-sounding FOMC sending the Greenback for a ride on Wednesday. The parliament voted that, if May's plan gets defeated, the government will have three days to present an alternative plan, in a clear attempt to rush into a solution before a hard-Brexit becomes real on March 29th. A government spokesman said the government always planned to provide certainty quickly if the Brexit deal is voted down next week, but is hard to see "fresh certainties" available. Furthermore, PM May said that the Parliament will have a vote on implementing the backstop, but that is on EU's hands, no May's one. The situation is chaotic in the UK and the GBP/USD pair holds above 1.2700 only because of broad dollar's weakness. At this point, however, seems Parliament rejection of May's deal has been already priced in.