The Indian Rupee (INR) is currently facing significant headwinds against the British pound (GBP), recently reaching 90-day lows near 0.008259, which is 2.3% below its three-month average of 0.008459. Analysts attribute this depreciation largely to a record low exchange rate of 90.42 per U.S. dollar and a widening trade deficit, exacerbated by hefty tariffs on Indian exports to the U.S. This unfavorable economic climate has led to substantial foreign investment outflows, with approximately $17 billion withdrawn from Indian equities this year. As the Reserve Bank of India (RBI) adapts its policy stance to allow for a weaker rupee, the outlook remains bearish.
On the GBP side, currency sentiment is being pressured by dovish expectations surrounding the Bank of England’s (BoE) interest rate decisions. Speculation around multiple rate cuts has weighed on the pound, particularly in light of forecasts suggesting a sluggish UK economy. While the UK is anticipated to release GDP growth data that could potentially show a modest recovery, analysts remain cautious, as even a minor rebound could further undermine the GBP's position.
Recent market movements show that while GBP has shown relative strength against the U.S. dollar, responding positively to improved economic forecasts, it has weakened against the Euro. This divergence reflects a growing volatility in the currency, prompting UK fund managers to consider increasing their foreign exchange hedging strategies for 2026.
Looking forward, both currencies demonstrate vulnerability due to respective economic challenges. The INR is under pressure from domestic economic shortcomings and policy adjustments, while the GBP faces uncertainty linked to both its domestic monetary policy and broader geopolitical challenges. Given these dynamics, currency watchers will need to proceed with caution as fluctuations are likely to persist.
