The GBP INR exchange rate was able to recoup the majority of its losses today as markets brace for the Reserve Bank of India’s (RBI) policy meeting later in the week.
Indian Rupee (INR) Slides ahead of Rate Decision
Indian Rupee slumped in afternoon trade today as investors increasingly shied away from the Indian currency ahead of a RBI policy meeting on Wednesday.
The majority of economists forecast that the central bank will vote to cut rates by 25 points at the upcoming meeting, lowering the nation’s interest rates to 6%, its lowest rate in over six years.
The move comes as analysts predict that countries next retail inflation figures will come in well below the RBI’s initial forecasts, after the inflation rate fell to a record low of 1.54% in June, prompting the government to push the central bank to lower lending rates and to help stimulate the economy.
Pound (GBP) Pressured as UK Government Shuns Transitional Deal with EU
Meanwhile the Pound faced some pressure earlier today as the government moved to refute suggestions that freedom of movement may continue for an unspecified period after Brexit.
The recent speculation was driven by comments from Chancellor Philip Hammond on Friday as he said that full immigration controls could take ‘some time’ to implement after the spilt.
Markets fears that a lack of a transitional deal on freedom of movement will also prevent any chance of a transitional trade deal when the UK finally breaks away from the EU in 2019 as EU officials have repeatedly stated that freedom of movement is a perquisite to retaining access to the single market.
GBP INR Exchange Rate Forecast: BoE to Also Meet this Week
The RBI will not be the only central bank to meet this week as the Bank of England (BoE) also gathers for its latest monetary policy meeting on Thursday.
Subsequent movement in the GBP INR exchange rate will likely be driven by the tone of the BoE’s accompanying statement, with any hint that the bank may be moving closer towards a rate hike likely to send Sterling higher.
Meanwhile outside of the RBI’s rate decision the Indian Rupee may also stumble this week with the release of the country’s latest Manufacturing PMI on Tuesday, with the index expected to show a slight decline in India’s factory activity in July.
Current Interbank Exchange Rates
At the time of writing the GBP INR exchange rate was trending around 84.4110 and the INR GBP exchange rate was trending around 0.0118.
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