GBP/INR Outlook:
Slightly positive, but likely to move sideways as the rate is above its recent average and lacks a clear driver.
Key drivers:
• Rate gap: The Bank of England has opted for a more dovish stance, holding interest rates steady, while India's central bank faces pressure from a high current account deficit.
• Risk/commodities: Recent fluctuations in global crude oil prices remain a concern, as India's dependence on oil imports can impact the INR.
• One macro factor: India's persistent current account deficit could continue to exert pressure on the INR amidst weak manufacturing exports.
Range:
GBP/INR is likely to hold steady within the recent range, drifting within its current trading levels.
What could change it:
• Upside risk: A significant improvement in UK GDP figures could boost the GBP.
• Downside risk: Continued FPI outflows from India could further weaken the INR.