The Pound to Indian Rupee (GBP INR) exchange rate nosedived this afternoon as concerns over the progress of Brexit caused the pairing to completely erase its weekly gains.
Interbank GBP INR is currently at around 85.4584, down 0.91% from this morning’s start levels of around 86.3832.
Sterling (GBP) Sentiment Slumps as Brexit Talks Fail to Progress
Pound Sterling (GBP) exchange rates fell sharply this afternoon as the EU’s chief negotiator Michel Barnier told reporters that that the talks over the UK’s divorce bill had reached ‘deadlock’, following the end of the fifth round of Brexit talks.
Sterling sentiment swiftly plummeted after Barnier said that disputes over the bill were ‘very disturbing’, with Barnier warning that this would mean that it is too early for discussions to move to the second stage.
Barnier told reporters; ‘I am not able in the current circumstances to propose next week to the European Council that we should start discussions on the future relationship.’
This will be a major blow to the UK government’s timetable for Brexit talks, as officials had hoped that talks over Britain’s exit agreement would have gone far enough for the two sides to begin discussing future trade relations.
However Barnier did offer some glimmer of hope for future talks as he suggested that there was ‘new momentum’ in other areas of negotiations, such as discussions over citizens’ rights.
Barnier also indicated that trade talks could get underway early next year, concluding that ‘Decisive progress is in our grasp within the next two months’.
Indian Rupee (INR) Bolstered by Impressive Production Figures
Meanwhile, the Indian Rupee was strengthened this afternoon by a stronger than expected rise in domestic Industrial Production.
According to data published by the Central Statistics Office, industrial output rocked up from 0.9% to 4.3% in August, sailing past expectations of a more modest rise to 2.4%.
Data showed that the fastest output growth was seen in the electronics and pharmaceutical sectors, which helped to offset declines in production for furniture and tobacco products
The sharp uptick in production suggests that the industrial sector may have managed to overcome the teething problems that followed the implementation Goods and Services Tax (GST) earlier this year, a solid sign for future output growth.
GBP INR Exchange Rate Forecast: Rising UK Inflation to Prompt Response from BoE?
Looking ahead, the GBP INR exchange rate may be able to recoup its losses in the coming week as the UK releases it latest CPI figures, with economists forecasting that inflation will have continued to accelerate in September.
Another jump in inflation is likely to place even more pressure on the Bank of England (BoE) to tighten monetary policy, increasing the odds of a November rate hike and propelling Sterling higher.
Meanwhile, the Indian Rupee may find itself weakening over the coming weeks following suggestions from the IMF that recent domestic economic reforms will cause economic growth to slip over the coming year.