The recent developments in the GBP to INR exchange rate reflect a complex interplay of factors affecting both currencies. Analysts note that the British pound (GBP) has experienced some strength following the Bank of England's (BoE) latest interest rate decision, which, despite cutting rates, indicated a potentially slower pace for future cuts. This has bolstered positive sentiment towards the pound.
However, pressure remains as UK fund managers are reportedly increasing foreign exchange hedging due to anticipated volatility in the GBP. The pound has gained against the U.S. dollar, supported by improved economic growth forecasts. Nevertheless, it faced some weakening against the Euro as investors brace for an interest rate cut at the BoE’s upcoming meeting.
On the other side, the Indian rupee (INR) has reached a record low of 90.42 per U.S. dollar, reflecting a 5% depreciation over the past year. Contributing factors include a widening trade deficit, significant foreign investment outflows, and a shift in the Reserve Bank of India’s (RBI) policy allowing for a weaker rupee under the current economic circumstances. Recent reports indicate that the RBI is prioritizing stability over defending a specific exchange rate amid these challenges.
Currently, the GBP to INR exchange rate stands at 119.9, which is 1.4% above its three-month average of 118.3, trading within a relatively stable range. Given these dynamics, market participants are advised to monitor any shifts in central bank policies and macroeconomic indicators closely, as both the pound and rupee navigate a landscape marked by volatility and uncertainty.
