GBP/INR: Rupee Seen Firmer Against Sterling
GBP/INR is stable at around 91.00 on Tuesday as the British pound attempts to recover the 10% loss against the rupee this year.
While the Indian rupee is close to a record low against the US dollar, the Asian currency is trading at a two-year high against the British pound.
The rupee’s relative strength against the Sterling is primarily down to the dire outlook for the British economy. Aside from the uncertainty a new Prime Minister and monarch will bring, the country is facing an economic crisis.
Inflation remains stubbornly high due to the rising energy costs caused by Russia’s invasion of Ukraine. Furthermore, consumers are beginning to tighten their belts as the energy crunch takes hold.
Data from the Office of National Statistics released this week showed retail sales in August dropped 1.6% (MoM), the sharpest decline since December 2021.
Subsequently, the Bank of England (BoE) has told the nation to brace for a lingering recession in the coming months. However, according to Michael Hewson, chief market analyst at CMC markets, “the UK is in recession already.”
Check out our free comparison tool to find out the cheapest way to send money abroad.
Can the BoE Steady the Pound?
The British pound may see some relief when the bank of England announces its interest rate decision. The central bank is widely expected to raise the benchmark borrowing cost to 50 basis points from 1.75% to 2.25%.
While the rate hike is priced in, there is always chance the BoE tightens more than expected, and the minutes reveal a more hawkish stance. In this event, GBP/INR may reverse some of the recent losses. However, should the bank deliver 50 bp as expected, the pound is likely to continue on its downward path.
British Pound to Rupee Forecast
The weekly price chart shows GBP/INR is close to its lowest level since march 2020. The pound’s decline has taken it below the 200-Week Moving Average (WMA) at 90.96, which now provides long-term technical resistance.
Currently, GBP/USD sees near-term support at the recent low of 90.56. However, significant support is not found until 87.50 (23 March 2020 low). Notably the Relative Strength Index (RSI) is oversold on the weekly time-frame, which may help stabilize the GBP/INR pair. However unless the Bank of England shocks the market on Thursday, we expect the pound to continue lower against the rupee in the coming weeks.