Bias: The GBP/INR is currently bullish-to-range-bound, above the 90-day average and in the upper half of the 3-month range.
Key drivers:
• Rate gap: The Bank of England has communicated a cautious stance on future rate cuts, while the Reserve Bank of India has been actively intervening in the forex market to stabilize the rupee, leading to a widening rate gap between the two currencies.
• Risk/commodities: Oil prices have been fluctuating, which affects the Indian rupee as higher oil costs can increase India's trade deficit and put additional pressure on its currency.
• Macro factor: With India's trade deficit widening due to U.S. tariffs, export growth has slowed, impacting the rupee's performance against the pound.
Range: Expect the GBP/INR to drift within the recent 3-month range as traders assess broader market trends and local economic factors.
What could change it:
• Upside risk: Strengthening UK economic data or a delay in U.S. tariffs could boost the pound further.
• Downside risk: Continued capital outflows from India or worsening trade conditions may lead to a decline in the rupee's value.