GBP INR Nosedives as Brexit Finally Begins

The Pound to Indian Rupee (GBP INR) exchange rate slumped to a two-week low on Wednesday as Sterling sentiment soured following the announcement that Prime Minister Theresa May signed the letter to trigger Article 50 of the Lisbon Treaty.

The GBP INR rate fell to low of 80.48 following the announcement, down from a high of 81.25 at the close of European trading yesterday.

Pound (GBP) Weakened as Brexit Process Officially begins

The Pound (GBP) collapsed earlier this morning as investors reacted poorly to the start of the UK’s exit from the European Union.

Traders remain uncertain over what Brexit will mean for the British economy as the UK government plans to split completely from the single market, which has allowed free trade between UK businesses and the continent for decades.

The entire process is likely to breed uncertainty as it will be the first time a nation has made the decision to leave the EU, with analysts having no real model to work from.

Jim Leaviss, Head of Retail Fixed Interest at M&G Investments, said;

‘Unwinding EU membership is unprecedented and the economic implications are highly uncertain. Given this uncertainty, consumers and businesses are likely to be cautious about the future economic outlook as well.’

Indian Rupee (INR) Rises as Trump Invites Modi for State Visit

The Indian Rupee was also strengthened today by reports that Donald Trump made another offer to host Prime Minister Narendra Modi later this year as the US President praised Modi’s economic reforms in a phone call on Tuesday.

Markets are hopeful that such a meeting could help to create greater ties between the US and India and provide further opportunities for trade between the two countries.

Indian officials said;

‘Overall our sense was that the administration has a very positive view of the (India-US) relationship and a very positive view of India.’

While 16% of exports from India are bound for the US, only 5.4% of the nation’s imports actually originate from America compared with 16% with China.

With Trump increasingly eager to bolster US trade opportunities and to pressure Chinese dominance in the region, analysts speculate that the US administration may look to reach a trade agreement with Modi should he visit, prompting the uptick in the Rupee.

GBP INR Exchange Rate Forecast: UK Consumer Confidence Ahead

The GBP INR exchange rate is likely to cede further ground on Thursday following the release of the UK’s latest Consumer Confidence survey, with Gfk expected to report that household sentiment slid from -6 to -7 in March as rapidly rising inflation and anaemic wage growth pressures family budgets.

Meanwhile the Indian Rupee may retreat at the end of the week if February’s Infrastructure figures show that output fell for the second consecutive month.

Looking further ahead the Pound is likely to meet further volatility over coming weeks as Brexit negotiations start to get underway and markets are given some idea of what sort of tone the talks will take.

Matthew Andrews

Contact Matthew Andrews