GBP/INR Outlook:
The GBP/INR rate is currently slightly positive and likely to move sideways, trading just above its recent average but lacking a clear driver for a significant increase. The rate is near the mid-range of its 3-month trading band.
Key drivers:
• Rate gap: The Bank of England's dovish outlook contrasts with a strengthening Indian economy benefiting from US-India trade agreements.
• Risk/commodities: Volatile global oil prices are affecting India’s trade balance and, subsequently, the INR.
• One macro factor: Political uncertainty in the UK, particularly regarding key leadership tests, may continue to weigh on the GBP.
Range:
Expect GBP/INR to drift within the recent range, likely testing both the lower and upper limits.
What could change it:
• Upside risk: A positive outcome in UK political events could bolster GBP.
• Downside risk: Continued political uncertainty or weak economic indicators from the UK could further pressure the GBP.