The Pound to Indian Rupee (GBP INR) exchange rate slumped this afternoon as Prime Minister Theresa May announced that she will trigger Article 50 next Wednesday, effectively beginning the Brexit process and starting two years of negotiations.
The GBP INR rate fell to 80.95 following the announcement, down from a high of 81.22 earlier in the morning.
Pound (GBP) Weakened as Brexit Set to Begin Next Week
The Pound (GBP) softened this afternoon as Theresa May announced that Britain would begin the process to leave the European Union on Wednesday 29
after being granted the authority to trigger Article 50 by parliament last week.
UK Brexit secretary David Davis said;
‘The government is clear in its aims: a deal that works for every nation and region of the UK and indeed for all of Europe – a new, positive partnership between the UK and our friends and allies in the European Union.’
However Sterling sentiment fell as markets are concerned by May’s plans to pursue a ‘hard Brexit’, in which she will seek to break ties with the EU including access to the single market, a prospect that many analysts believe will negatively impact UK businesses.
While markets have known for some time the PM planned to begin the Brexit process by the end of March the kneejerk reaction to the news suggests that Brexit has not been entirely priced into the Pound, and the currency could stand to fall further once negotiations get underway.
Indian Rupee (INR) Rises as Demonetisation Begins to Pay Off
The Indian Rupee advanced on Monday as Prime Minister Narendra Modi’s shock decision to demonetise over 80% of the nation’s cash reserves appears to be paying off.
The Rupee was strengthened as banks report that they are holding a near-record high of 5 trillion rupees in surplus cash, suggesting that Modi’s move to cut down on so-called ‘black money’ has been effective.
INR investors are also likely to look favourably upon the PM’s plan to implement further reforms as he clamps down on corruption in the country as, following his landslide victory in recent state elections, it appears he will retain the support needed implement his economic policies.
GBP INR Exchange Rate Forecast: UK Inflation Ahead
The GBP INR exchange rate may rally tomorrow as the UK releases it latest Consumer Price Index, with the data expected to show that British inflation surged from 1.8% to 2.1% in February.
The jump will likely put further pressure on the Bank of England to raise interest rates following the hawkish dissent by Kristin Forbes in last week’s meeting as the policymaker voted to hike rates in the face of rapidly rising inflation.
Meanwhile, the Indian Rupee may cut some of its gains on Tuesday if the fourth quarter Current Account figures show that the nation’s deficit rose from $3.4bn in the three months leading to September – as some economists believe to be the case.