INR/GBP Outlook: Bearish, as the rate is below its recent average and near recent lows, pressured by external trade factors.
Key drivers:
- Rate gap: The Reserve Bank of India's recent interventions contrast with the Bank of England's cautious stance on rate cuts, which keeps the rupee under pressure.
- Risk/commodities: Ongoing U.S. tariffs on Indian exports are negatively impacting trade and increasing the trade deficit, straining the rupee.
- One macro factor: The UK's GDP growth predictions have been revised down, with potential ramifications for the pound as economic growth slows.
Range: The INR/GBP is likely to hold near its recent lows within the volatile range observed.
What could change it:
- Upside risk: Positive developments in trade negotiations between India and the U.S. could boost the INR.
- Downside risk: Further tariff increases from the U.S. could deepen the trade deficit and drive the rupee lower.