Recent developments suggest a challenging outlook for the GBP to INR exchange rate. The British pound has been under pressure due to dovish expectations surrounding the Bank of England (BoE). Speculation about multiple rate cuts in 2026 is weighing on Sterling, particularly following signs of a sluggish UK economy. Analysts indicated that while there may be a modest rebound in the UK’s GDP for October, any such recovery could still leave the pound vulnerable.
The current market dynamics showcase the pound's mixed performance against various currencies. On one hand, it has strengthened against the U.S. dollar, reaching a five-week high, likely driven by improved economic growth forecasts. Conversely, the pound has weakened against the Euro as investors prepare for an expected BoE interest rate cut on December 18, juxtaposed against the European Central Bank's paused easing cycle.
In contrast, the Indian rupee has faced severe headwinds. It has depreciated significantly, reaching a record low of 90.42 per U.S. dollar, reflecting a 5% decline year-on-year. This depreciation has been influenced by a widening trade deficit, increasing foreign currency demand, and substantial foreign investment outflows amounting to nearly $17 billion. Experts note that the Reserve Bank of India is transitioning to a policy that tolerates a weaker rupee as it grapples with these economic challenges.
In terms of exchange rate levels, GBP to INR has recently reached 90-day highs near 121.1, which is approximately 2.5% above the three-month average of 118.2. This volatility continues to attract attention from UK fund managers, with many planning to increase foreign exchange hedging to mitigate risk associated with the pound's instability.
Overall, the outlook for the GBP to INR exchange rate remains complex, with the pound's performance largely dependent on upcoming economic data and monetary policy decisions, while the rupee's significant depreciation raises concerns about its future trajectory. As currencies respond to underlying economic fundamentals, stakeholders should consider these developments in planning their international transactions.
