Pound to Indian Rupee Exchange Rate Forecast: GBP/INR could Surge Next Week if Brexit Transition is Agreed

Pound to Indian Rupee Exchange Rate (GBP/INR) Could Extend Highs Next Week due to Weak Rupee

Despite a lack of supportive factors in Sterling (GBP) trade, the Pound to Indian Rupee (GBP/INR) exchange rate has put in solid gains.

GBP/INR has been unable to hold its best levels though. The pair opened this week at the interbank level of 90.02 and hit a weekly interbank high of 90.96 on Wednesday, but had slipped from that level at the time of writing.

Sterling has been unable to hold its gains against the Indian Rupee (INR) due to a lack of support for the British currency on persistent Brexit uncertainty despite the Rupee’s broad weakness.

If the Rupee remains weak, however, the pair could surge next week. Investors are hoping for major Brexit developments at next week’s EU summit and if any transition agreement is made Sterling is likely to strengthen.

Indian Rupee (INR) Exchange Rates Weakened by Reserve Bank of Indian (RBI) News

On top of this week’s soft domestic data, the Indian Rupee has been weakened by concerning news from the Reserve Bank of India (RBI) in recent sessions.

Monday saw the publication of India’s February Consumer Price Index (CPI) results, which slowed from 5.07% to 4.44% year-on-year rather than the expected 4.8%.

WPI’s inflation print fell short on Wednesday too, sliding from 2.84% to 2.48% rather than the forecast 2.5%.

Perhaps the biggest reason for INR weakness on Wednesday however, was the news that the Reserve Bank of India had banned a key import finance tool.

The bank banned lenders from being able to issue guarantees as letters of undertaking to foreign banks. This decision followed a major scam utilised by two jewellers.

The news bolstered short-term demand for the US Dollar (USD), which left the Rupee broadly weaker.

Pound (GBP) Exchange Rates Fail to Find Support on UK Fiscal News

Tuesday saw the UK Treasury hold its Spring Statement, but the news was largely unsurprising and Britain’s economic outlook was largely unchanged since the last Budget presentation in November 2017.

While UK Chancellor Philip Hammond was optimistic about the UK deficit and 2018 growth, the independent Office for Budget Responsibility (OBR) watchdog was more cautious and gloomy.

The OBR had indeed raised its 2018 UK growth forecast from 1.4% to 1.5%, but growth is still forecast to slow in the following half-decade.

Brexit uncertainty remained a key point for the OBR too and the group predicted that Britain may continue to pay off its EU divorce bill for decades.

Market analysts were overall unimpressed with the Spring Statement and remained concerned about Britain’s economic outlook. As a result, Pound demand was limited.

Pound to Indian Rupee (GBP/INR) Forecast: Major Brexit Developments Possible Next Week

Investors may be given more reason to buy the Pound next week, so if the Indian Rupee remains weak then the Pound to Indian Rupee (GBP/INR) exchange rate could see significant gains.

Next Tuesday will see the publication of Britain’s February Consumer Price Index (CPI) results. If they are higher than expected, bets of a May Bank of England (BoE) interest rate hike may rise. However, investors are more likely to focus on the week’s EU summit.

The UK government is expecting to agree to a major part of the Brexit process during the EU summit – a post-Brexit transition period.

If a transition period can be agreed it will be the first solid Brexit development since the beginning of the year and would likely make Sterling much more appealing.

The Indian Rupee, on the other hand, is unlikely to be influenced by data next week amid a quieter economic calendar. The Rupee will continue to be driven by any Reserve Bank of India (RBI) developments, as well as US Dollar (USD) strength.

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Josh Ferry Woodard

After leaving university in 2011 Josh briefly worked as a currency analyst in the South West of Cornwall. Josh continued monitoring the currency markets and publishing exchange rate analysis after moving to London in 2012, with a particular focus on the impact of economic and political stimuli on forex. Josh was a regular contributor to The Telegraph’s weekly currency feature for several years.

Contact Josh Ferry Woodard

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