INR/GBP Outlook:
The INR/GBP is likely to move sideways as it trades close to the recent average. Current political uncertainty in the UK adds to GBP's volatility, while the INR remains steady.
Key drivers:
• Rate gap: The Reserve Bank of India's flexible policy contrasts with the Bank of England's dovish outlook, as the BoE hints at possible interest rate cuts.
• Risk/commodities: Volatility in crude oil prices impacts India's trade balance, putting pressure on the INR demand.
• One macro factor: UK political instability, including the Gorton by-election, raises concerns affecting GBP strength.
Range:
Expect the INR/GBP to hold within the recent 3-month range, showing little movement in either direction.
What could change it:
• Upside risk: A stronger-than-expected result in the UK by-election could boost GBP.
• Downside risk: Further geopolitical tensions involving India might weaken the INR.
