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Pound Indian Rupee Slips as Gujarat Exit Polls Boost Rupee

Indian Rupee Currency Forecast

The Pound Indian Rupee exchange rate has struggled to hold its ground despite some strong UK data, as Brexit concerns took focus once again. The Rupee was boosted towards the end of the week by Gujarat exit polls, giving markets hope that India’s Prime Minister will remain in power.

GBP INR began the week at the level of 86.32 and has spent much of the week lower. The pair trended in the region of 85.90 on Friday morning.

Pound (GBP) Strength Limited on Brexit Concerns

After being briefly boosted by strong UK retail data and Brexit hopes on Thursday, the Pound saw weaker trade on Friday morning.

With the week’s UK ecostats having little effect on the economic or currency outlook, Brexit news took focus once more.

Markets are becoming anxious about whether or not the second phase of negotiations can be finished before the Brexit date in March 2019.

These concerns worsened on Friday when it was indicated that UK-EU trade talks were unlikely to begin in full until March 2018.

EU officials have indicated that the second phase will be more difficult than the first, giving Britain just about a year to secure a post-Brexit transitional period or trade deal with the EU.

Indian Rupee (INR) Boosted by State Election Exit Polls

Markets are hoping that Indian Prime Minister Narendra Modi could win another national election in 2019 and continue his economic agenda, thanks to exit polls from a state election in Gujarat.

Modi’s Bharatiya Janata Party (BJP) looks on track to win December’s legislative assembly election in Gujarat, according to exit polls.

As Gujarat is Modi’s home state, the election is being seen as a litmus test on his leadership and the party’s success in the election would boost hopes of Modi’s re-election in 2019.

According to a note from Maybank;

‘A possible landslide victory by the BJP could signal strength in the coalition, paving the way for PM Modi to continue his economic policies,’

However, uncertainty still remains about the state election and the final results will not come in until next week.

The Rupee has also been boosted by a weaker US Dollar (USD) since the Federal Reserve took a cautious stance in Wednesday’s policy decision, still projecting just 3 rate hikes for 2018.

Pound Indian Rupee Forecast: Gujarat Election Result in Focus

Next week’s biggest Pound Indian Rupee exchange rate movement is likely to be influenced by the result of Gujarat’s state election, with most of next week’s economic data unlikely to be highly influential.

If Indian Prime Minister Modi’s Bharatiya Janata Party (BJP) wins the election, demand for the Rupee will rise on hopes that Modi will remain popular in 2019 elections.

If the BJP party loses however, GBP INR could see a surge in demand as the Rupee falls.

The Pound, on the other hand, is likely to be influenced by any potential Brexit developments over the weekend or throughout next week.

Markets are concerned that the second phase of Brexit negotiations will not begin until March 2018, so optimism or signs that progress could be made earlier than that would make the Pound more appealing.

GBP INR Interbank Rate

At the time of writing this article, the Pound Indian Rupee exchange rate trended in the region of 85.90. The Indian Rupee to Pound exchange rate traded at around 0.01165.