Currency Market Update 18-Dec: Volatility as usual in Cable

GBP/USD pair tumbled to 1.3090, correcting nearly 3% from election high of 1.35, amid concerns of hard Brexit. It is noteworthy that Boris Johnson had maintained that UK would not extend negotiation period beyond 2020 during election speeches. Thus, this move seems more of correction before a rally. Going forward, Cable will take further cues from UK’s CPI inflation number, to be released later today. Technically, GBP/USD pair key supports at 1.3050 and 1.2980 levels. On other hand, US dollar index witnessed a mild recovery after release of strong housing market data. House construction permit surged to 12 year high of 1.48 M.

On domestic front, IMF chief economist Gita Gopinath suggested that IMF is likely to significantly cut India’s growth forecast amid slowing consumption and private investment. India’s 10 year bond yields, which corrected to 6.73%, will take further cues from the outcome of GST meet, later during the day. It is noteworthy that Government has set difficult monthly target of INR 1.1 Trillion for GST collection. USDINR pair opened the session at flat note at 71.04 against previous close of 70.97. Partially convertible rupee is likely to trade with weakening bias amid continued buying pressure from national banks. USDINR pair has first support at 70.97 and second support at 70.90. USDINR pair has first resistance at 71.19 and second resistance at 71.28-71.30 levels. Range for day 70.90-71.20