Pound (GBP) Trended Lower after Article 50 Supreme Court Appeal Date Set
Confidence in the Pound (GBP) was not boosted by the news that UK industrial production had contracted on the month in September. This offered a fresh suggestion of weakness within the domestic economy, despite the corresponding manufacturing production figure showing an improvement.
With the date for the government’s Supreme Court appeal against the Article 50 ruling now set for December 5th Brexit-based worries weighed more heavily on the Pound Indian Rupee (GBP INR) exchange rate on Tuesday.
On the other hand, the Indian Rupee (INR) strengthened in response to a continued weakening in oil prices. As hopes of OPEC agreeing to a production cut diminished, the price of Brent crude remained under pressure, offering support to the Rupee due to the Indian economy’s high level of oil imports. This helped to offset the negative impact of uncertainty surrounding the outcome of the US presidential election, despite emerging market assets in general seeing weakness as investors braced for the possibility of a shock Donald Trump victory.
GBP INR Exchange Rate Forecast: Rupee Volatility Predicted in Response to US Election Result
Market volatility is expected to get more intense as the results of the US election begin to come in, with investors likely to react rapidly to any swings in the direction of the vote. Should Hillary Clinton remain on track to win the vote then the GBP INR exchange rate is expected to weaken, with a Democrat victory seen to be positive for the global economy and higher-risk assets. However, any Rupee boost from a Clinton win would likely only be short-lived. Markets have already priced in relatively high odds of this eventuality, while the election of the Democrat is seen to leave the Federal Reserve clear to raise interest rates in December.
Conversely, a Trump victory is expected to see the GBP INR exchange rate trending higher, given the negative impact that the result would likely have on the risk-sensitive Rupee. Investor sentiment could remain bearish for a more extended period in this scenario, as Trump’s policies lend to a far greater level of uncertainty.
Although market focus will remain on the US results the Pound could find a rallying point on the back of an improved September visible trade deficit. Forecasts point towards the deficit narrowing from -12.1 billion to -11.3 billion on the month, something which could suggest that the domestic economy remains resilient despite continued Brexit-based uncertainty.
Current Interbank Exchange Rates
At the time of writing, the Pound to Indian Rupee (GBP INR) exchange rate was slumped in the region of 82.29, while the Indian Rupee to Pound (INR GBP) pairing was trending higher at 0.012.