INR/GBP Outlook: Slightly weaker, but likely to move sideways, as the rate is below its recent average and near recent lows without a clear driver supporting a significant move.
Key drivers:
- The Reserve Bank of India's efforts to stabilize the INR through liquidity measures contrasts with the Bank of England's more robust position, which supports the GBP.
- The INR is facing pressure from a widening current account deficit, mainly due to elevated gold imports and reduced exports to the US following recent tariffs.
- UK inflation remains high, leading markets to expect that the Bank of England may hold rates steady, which could support the GBP.
Range: The INR/GBP is likely to drift within its recent range, as mixed signals from both economies may limit significant movements.
What could change it:
- A rebound in foreign portfolio inflows could strengthen the INR.
- Political instability in the UK, particularly ahead of local elections, could undermine investor confidence in the GBP.