Despite ongoing Brexit uncertainties, the Pound is still seen as a less risky investment than emerging-market currencies like the Indian Rupee, and the latest geopolitical uncertainties have pushed investors towards safer investments.
As a result, GBP INR has edged away from this week’s one-month-low of 82.55 and currently trends near the level of 83.00.
Pound (GBP) Edges Higher Ahead of UK Trade Results
Sterling has seen largely limp trade this week amid a lack of fresh supportive UK data and persistent concerns about the Brexit process.
Ex UK diplomat Sir Simon Fraser stated this week that Brexit negotiations did not seem to have gotten off to a strong start.
There is also the rising expectation that the UK will need to pay some kind of UK-EU divorce bill. The UK government has denied reports that it is willing to pay €40b on exiting the union.
Last week’s Bank of England (BoE) policy meeting also led to broad Pound losses, as investors now don’t expect the bank to take a hawkish tone on monetary policy any time soon.
Overall, this week has seen Sterling just about holding above key support levels due to weakness in its rivals.
Looking ahead, key UK data may inspire GBP volatility in the coming weeks.
Tomorrow will see the publication of Britain’s June trade report, as well as manufacturing and industrial production reports.
If the UK’s trade deficit narrows the Pound could climb, but a wider shortfall would be negative for the British currency.
Looking ahead, next week will be vital for Pound exchange rates. Britain’s July inflation and retail sales reports will be published, as well as June’s wage growth results.
Inflation and wage growth data has the biggest potential to alter the current long-term Pound outlook.
Indian Rupee (INR) Weakens as Investors Look to ‘Safe Havens’
Riskier emerging-market currencies like the Indian Rupee have slumped today as geopolitical uncertainties jump again and investors buy into ‘safe haven’ assets instead.
Rhetoric tensions have flared up again between the US and North Korea this week, as both nations make threats of potential military action.
While North Korea issues have been ongoing in the background for months, the latest exchange between the US and NK spooked investors.
The Indian Rupee had previously been sturdy due to rising economic hopes in India and weaker oil prices.
Thursday will see the publication of India’s July trade balance results, with industrial and manufacturing production data from June coming in on Friday.
Next week will see the publication of India’s key July inflation results, which could influence the Rupee outlook slightly.
Upbeat results would be INR positive.
GBP INR Interbank Rate
At the time of writing this article, the GBP INR exchange rate trended in the region of 83.01. The Indian Rupee to Pound exchange rate traded at around 0.0120.