The Pound to Indian Rupee (GBP INR) exchange rate has struggled to regain its recent losses as ‘Brexit’ sentiment remains low since the leaking of a supposed memo on Tuesday.
GBP INR is currently trading at around 84.45 on the interbank market.
Pound (GBP) Weakened as ‘Brexit’ Uncertainty Resurfaces
The Pound (GBP) has suffered from further ‘Brexit’ uncertainty this week after Sterling’s post-Trump gains came to an end on Monday.
Markets were quickly reminded of why they fear the uncertainty that surrounds ‘Brexit’ on Tuesday as the media reported on a leaked memo, supposedly from Whitehall, that suggested the UK government still did not have a clear plan on how to split from the EU and that the cabinet is heavily divided.
Despite Prime Minister Theresa May denying that the document had anything to do with the government, the memo renewed investor fears of the impact ‘Brexit’ will have on the UK economy.
Traders are still fearful that the UK government will attempt to pursue a ‘hard Brexit’ in which Britain would gain stronger controls on immigration but lose access to the single market, creating worries that some businesses will leave the UK in order to retain access.
Indian Rupee (INR) Gains as Investors React Positively to Crackdown on ‘Black Money’
The Indian Rupee has continued strengthening thanks to the Indian government’s recent crackdown on corruption and illegal cash holdings known as ‘black money’, with the government planning to curb tax evasion by bringing in billions of unaccounted money back into the economy.
Prime Minister Narendra Modi made the surprise announcement last week that all 500 and 1000 rupee notes would no longer be accepted as legal tender, forcing those in India to exchange the notes in banks.
Markets have also reacted positively
to speculation that the Reserve Bank of India may make further cuts to interest rates as they predict that it will help to improve economic growth and attract more foreign investment.
GBP/INR Exchange Rate Forecast: Will the Pound Stabilise?
With today’s surge in British retail sales, which rose from 4.0% to 7.6% in October, having minimal impact on the GBP INR exchange rate there is unlikely to be any major movement for the rest of the week’s session as neither currency is set to release any more data.
Looking towards next week, the most notable price of data will be the British GDP report on Friday which could help to strengthen the Pound if it continues this year’s uptrend and rises past 2.3% in the third quarter.
However the Pound could drop further in the interim if markets become spooked by any ‘Brexit’ murmurs made by the UK government, especially if it comes from one of the more out-spoken pro-leave members of the cabinet like Boris Johnson.