Pound to Indian Rupee Exchange Rate Near Two-Week-Low on Brexit Jitters

March 29, 2017 - Written by Ben Hughes

STORY LINK Pound to Indian Rupee Exchange Rate Near Two-Week-Low on Brexit Jitters

The British Pound to Indian Rupee exchange rate recovered from its worst levels on Thursday afternoon.

Brexit jitters lightened and the demand for the Pound increased as investors hoped the Brexit process would be smooth for both Britain and the EU – as well as not be too pricey for Britain. Friday’s UK growth stats could boost the Pound even further if they impress.

[Previously updated 30/03/2017]

Brexit uncertainty continued to dominate the outlook of the Pound, leaving the GBP INR exchange rate on a narrow downtrend.

With the UK already at odds with the EU over the negotiation process and priorities investors are unlikely to find particular cause for confidence in Sterling this week.

[Previously updated 29/03/2017]

The Pound to Indian Rupee exchange rate plunged on Tuesday as Sterling investors became increasingly jittery ahead of this week’s start to the Brexit process. GBP became more volatile on Wednesday and the Rupee weakened due to rising commodity prices.

GBP/INR began the week trending at the level of 81.59. The pair saw psychological resistance near the level of 82.00 and had instead fallen to a new two-week-low of 80.47 by Wednesday morning.

Pound (GBP) Volatile as Investors Prepare for Early Days of Brexit

Demand for the Pound was highly mixed on Wednesday, but GBP/INR remained relatively close to its weekly lows after a Tuesday plunge.

Despite initial strength in GBP trade earlier in the week, the British currency slumped on Brexit jitters on Tuesday evening after UK Prime Minister Theresa May signed a letter that would go on to activate Article 50 on Wednesday.

Investors continued to adjust their positions throughout Wednesday. Some sold the Pound in profit-taking after its gains earlier in the week while others bought it amid expectations that Brexit negotiations were unlikely to begin for another few months.

Indian Rupee (INR) Remains Sturdy Despite Rising Oil Prices

Demand for the Indian Rupee has been strong this week as India has seen continually strong investments from other nations.

Foreign investors have bought around US$6.91b in debt and equities in March alone amid hopes of a strong Indian economy and optimism around the nation’s Prime Minister Narendra Modi.

However, potential gains in the risky Rupee have been limited due to a drop in risk-sentiment in the last week. Rising uncertainty in the US has limited demand for risk-correlated assets.

Rising prices of commodities like oil and iron ore on Tuesday and Wednesday have also limited INR strength, allowing GBP/INR to recover from its worst levels on Wednesday morning.

GBP/INR Forecast: UK Growth Results Could Stabilise Sterling Jitters

The Pound to Indian Rupee exchange rate may struggle to recover from its lows this week, as mixed movement from Sterling investors will limit the British currency’s recovery potential.

Confidence in India’s economy will also keep the Indian Rupee sturdy.

Data due for publication later in the week could help to settle Sterling jitters however. Friday will see the publication of Britain’s key Q4 Gross Domestic Product (GDP) results, which could see the Pound cool if it beats expectations – especially if it’s strong enough to boost 2017 growth hopes for Britain which could put pressure on the Bank of England (BoE).

Indian data will also be published on Friday, including external debt and foreign reserves stats. These are unlikely to be highly influential however.

If prices of oil drop again, the Rupee could even strengthen later in the week which would make a GBP/INR recovery even less likely.

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