- Pound (GBP) Investors Indulge in Profit Taking– Following bullish run earlier this week
- ‘Brexit’ Polls Too Close to Call– Markets still appear confident in ‘Remain’ vote
- Indian Rupee (INR) Struggles on RBI Uncertainty– Central bank governor suddenly steps down
- Forecast: ‘Brexit’ Polls and Results to Influence GBP/INR– Results expected on Friday
GBP/INR Briefly Touches Above 100.00 On #EURef Day
The Pound to Rupee exchange rate fell flat on Thursday afternoon despite advance attempts from Sterling earlier in the day. GBP/INR briefly hit a 2016-high of over 100.00 in the morning as investors reacted optimistically to new ‘Brexit’ polls.
Polls released by Ipsos MORI and Populus put ‘Remain’ in a narrow lead, with ‘Remain’ gaining 5 points since Ipsos MORI’s last poll.
However, while Sterling remained sturdy, it failed to gain considerably as the currency was exchanged for holiday money by Brits ahead of Friday’s result announcements. Analysts also warn that a ‘Brexit’ is still possible.
The results of the EU Referendum are expected to be announced 7 AM BST on Friday morning. In the event of a ‘Brexit’, the Pound would plummet against the Rupee, but the Rupee would be easily advanced on after a ‘Remain’ vote due to current investor uncertainty in the Rupee.
(Published 10:07 22/06/2016)
Pound (GBP) Slips as Investors Take Profit From Tuesday Highs
The Pound made one of its largest one-day-gains against the Rupee in months on Monday as investors reacted to a series of EU Referendum polls suggesting that support for the ‘Remain’ campaign was strengthening.
However, after reaching 2016 highs on Tuesday, GBP/INR began to fall with the Pound sliding against many other majors. Hitting highs so shortly before Britain’s future is decided on Thursday left the currency ripe for a bout of profit-taking, causing Sterling to drop.
Investors may also be readjusting their positions due to estimates from polling experts that results were still too close to call. In an interview with The Independent, Professor John Curtice stated;
‘It’s around 50-50. To cut a long story short, undoubtedly last week Leave made progress – the first significant progress of the campaign. You actually had the phone polls calling it 50-50 and you had the internet polls having Leave ahead. It’s very, very tight. You can’t call this referendum – it’s too close.’
Recent polls have indeed been close. After a definite lead for the ‘Leave’ camp last week, ‘Remain’ has become slightly more appealing. However, bets on a ‘Remain’ vote as well as the assumption that undecided voters would lean towards the status quo have increased market confidence.
This week’s poll results include one from Survation, with ‘Remain’ at 45%, ‘Leave’ at 44% and ‘Undecided’ at 11%. An ORB poll from the Telegraph had ‘Remain’ at 53% and ‘Leave’ at 46%. Meanwhile, the latest YouGov poll for The Times had ‘Leave’ at 44% and ‘Remain’ at 42%.
Indian Rupee (INR) Struggles to Maintain Strength During RBI Uncertainty
Asian markets are in shock this week after news that Reserve Bank of India (RBI) Governor, Raghuram Rajan, suddenly announced that he would be leaving his post when his current term ends in September.
The central bank governor stated over the weekend that he would return to academic pursuits. Uncertainty over a lack of an announced replacement governor caused the Rupee to plummet when Asian markets opened on Monday morning.
‘With the government yet to name Rajan’s successor, investors are concerned about continuity of policies that boosted India’s foreign-exchange reserves to a record and helped reduce the swings in the rupee by more than half since he took office in September 2013.
Standard Chartered sees the currency weakening to 68.25 per dollar by the end of September. One-month implied volatility in the rupee climbed five basis points to 6.85 percent Wednesday, and has risen 17 basis points since June 17.’
With analysts unconfident towards the Rupee, it lost investor appeal. However, due to strong risk-sentiment and Sterling profit-taking during Wednesday’s session, the Rupee was able to recover slightly against the Pound.
Pound Sterling to Indian Rupee (GBP/INR) Exchange Rate Forecast: UK Votes on #EURef Tomorrow
While many polls this week have ‘Remain’ slightly ahead, the close result of the polls as well as the recent fluctuating nature of ‘Brexit’ views leaves a sudden change of sentiment as a distinct possibility, even with only one day until the historic EU Referendum vote takes place.
Quiet British and Indian economic calendars will be no reason to suggest muted movement in the Pound or Rupee, as the global market’s focus on the United Kingdom’s vote is certain to cause currency fluctuations.
Investors will likely focus especially on any perceived movements in ‘Brexit’ polls, with a few polls left to be released before the Referendum’s results are announced on Friday morning.
Opinium will be releasing a poll with a larger sample size on Wednesday afternoon. YouGov and Ipsos MORI will follow on Wednesday night and Thursday morning.
While UK voting will take place throughout Thursday, the Pound’s movements may see some last-minute pre-result movements depending on poll results. It is also possible that profit-taking will continue if investors sell the Pound in fear of a ‘Brexit’ result.
The Reserve Bank of India (RBI) has reassured markets that it is keeping a close watch on ‘Brexit’-related volatility ahead of Thursday’s vote and will take the actions necessary to ensure order.
The Pound Sterling to Indian Rupee (GBP/INR) exchange rate currently trends in the region of 99.0000, while the Indian Rupee to Pound Sterling exchange rate trades at around 0.0100.