GBP/INR Outlook:
Slightly positive, but likely to move sideways, as the rate is above its recent average but lacks a clear driver.
Key drivers:
- Rate gap: The Bank of England's recent decision to hold interest rates steady, combined with expectations for a future rate cut, indicates a more dovish stance compared to the Reserve Bank of India’s stable policy.
- Risk/commodities: Continued volatility in crude oil prices affects the Indian economy, contributing to the ongoing current account deficit, which puts downward pressure on the INR.
- One macro factor: Recent geopolitical tensions have led to increased market uncertainty, which could influence the GBP's relative strength against the INR.
Range:
GBP/INR is likely to drift within its recent 3-month range given the current position.
What could change it:
- Upside risk: An unexpected positive swing in UK GDP figures could boost the GBP.
- Downside risk: Further FPI outflows from India could put additional pressure on the INR, weakening it against the GBP.
