GBP/INR Outlook:
The GBP/INR exchange rate is slightly positive, but likely to move sideways. Currently, it is above its 90-day average and near the mid-range of recent fluctuations.
Key drivers:
• Rate gap: The Bank of England maintains steady interest rates, while the Reserve Bank of India allows a more flexible exchange rate. This difference influences GBP strength against the INR.
• Risk/commodities: Rising geopolitical tensions are creating risk aversion, which typically pushes investors towards safer currencies like the USD, impacting the INR negatively.
• One macro factor: Increased pharmaceutical and technology exports to the US have bolstered the Indian economy recently, providing some support to the INR.
Range:
Expect GBP/INR to drift within its recent range as the market digests external factors.
What could change it:
• Upside risk: A robust UK economic report could further strengthen the GBP.
• Downside risk: Continued geopolitical tensions could pressure the INR, leading to heightened risk aversion.
