January 9, 2017 - Written by James Fuller
STORY LINK GBP INR Exchange Rate Plummets as Theresa May Hints at ‘Hard Brexit'
The Pound to Indian Rupee exchange rate climbed out of its worst weekly levels on Tuesday afternoon as the week’s Sterling bearishness faded, as did demand for risk-correlated currencies like the Rupee.
Comments from the leader of the UK’s Labour party, Jeremy Corbyn, advocating for EU single market access boosted hopes from investors that Tory backbenchers would have enough support to vote for single market access to be a part of Brexit negotiations.
[Previously Updated 10/01/2017]
The GBP INR exchange rate fell to a two-month low this morning following comments from Prime Minister Theresa May over the weekend.
May's Comments Send Pound Indian Rupee (GBP INR) Trending Lower
The Pound Indian Rupee (GBP INR) exchange rate fell this morning following comments from Theresa May on Sunday, which indicate that the UK government will not attempt to remain in the single market post-'Brexit'.
The PM said in an interview that she was not interested in keeping ‘bits of EU membership’, leading investors to speculate that this will mean that the government will shun access to the single market.
May also reiterated her intention to gain greater controls over EU immigration. which reinforces the likelihood of a ‘hard Brexit' as EU leaders have repeatedly stated that in order to have access to the single market Britain would have to accept freedom of movement. As Commerzbank’s Esther Reichelt explains;
‘In particular as May signalled once again that the aim of controlling immigration was a red line she would not be willing to cross. That means that following Brexit the country is likely to lose access to the single market.’
However, Downing Street has been quick to try and allay fears that Britain has already decided to leave the single market as a spokeswoman said on Monday morning;
‘She hasn’t ruled anything in or out - she’s said she wants the best possible deal for trading with and operating within the single market.’
Demonetisation Continues to Hinder the Indian Rupee
The Indian Rupee continues to struggle from Prime Minister Narendra Modi’s shock decision to demonetise 86% of the country’s currency late last year.
Modi’s decision to void both the 500 and 1,00 rupee notes overnight in order to tackle corruption by targeting ‘black money’ caused chaos across India in November and unsurprisingly caused a slowdown in the domestic economy as the mainly cash-based society struggles due to a lack of the new notes.
The consumer goods market has reportedly fallen by around 1.5% as consumers, both rich and poor, lack the physical cash to purchase items, causing the latest manufacturing PMI to plummet from 52.3 to 49.6 as purchasing managers expect domestic demand to slump until the new notes are issued.
GBP INR Exchange Rate Forecast: Sterling May be bolstered by Production data on Wednesday
The GBP INR exchange rate may rally on Wednesday following the release of the UK’s latest Production figures, which are expected to show that production rose across Britain’s Construction, Manufacturing and Industrial sectors in November.
Meanwhile, the Indian Rupee may rise further in the second half of the week as analyst predict that Production will increase in India’s manufacturing sector in December thanks to an uptick in exports.
Looking further ahead, the Pound is likely to struggle in the run up to March when the UK government is expected to invoke Article 50 and begin the formal 'Brexit' process.
International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way,
ensuring you get the best exchange rates on your currency requirements.
TAGS: Currency Predictions Pound Rupee Forecasts