Pound to Indian Rupee Exchange Rate Fails to Hold Ground on Election Day
While the Pound (GBP) continues to find support in UK election bets, this week has seen rising uncertainty and a stronger Indian Rupee (INR) push the Pound Sterling to Indian Rupee (GBP/INR) exchange rate lower.
Since GBP/INR opened this week at the level of 93.65, the pair has been trending with a downside bias amid the Indian Rupee’s resilient appeal.
GBP/INR has recovered slightly from yesterday’s weekly low of 92.85, but has only climbed to around the level of 93.38 at the time of writing.
GBP/INR is now over half a Rupee below last week’s eight month high of 93.96. With UK politics dominating the outlook today though, the pair’s movement could still see a significant shift before the end of the week.
Pound (GBP) Exchange Rates Steady amid Anticipation for UK Election Outcome
Rising hopes for a Conservative Party majority at the 2019 General Election and avoiding a no-deal Brexit have dominated the Pound’s outlook in recent weeks, causing significant Sterling gains against major rival currencies.
Markets remain fairly confident in the likelihood of a Conservative majority today, and this has been the primary cause of the Pound’s fairly resilient movement this week so far. According to Strategists at Credit Agricole SA:
‘Our base case is for the Tory Party to secure a comfortable, at least a 20-seat majority and the outcome should be sufficient to keep the pound supported over the long run,
If the Conservatives win fewer seats, there is a risk of a ‘sell-the-fact reaction’ that could see the pound a bit weaker in the immediate aftermath.’
However, Sterling’s potential for further gains and holding its best levels has been limited, as the latest polls have shown mixed signs on the strength of the Conservative lead.
Amid signs that the election could be narrowing, as well as concerns about how Brexit will proceed even if the Conservative Party plan passes Parliament, uncertainty in the UK political outlook is keeping the Pound’s movement pressured today.
Indian Rupee (INR) Exchange Rates Benefit from Data and US Dollar Weakness
The Indian Rupee is a currency correlated to global trade and risk-sentiment – meaning it has benefitted strongly from recent weakness in the US Dollar (USD).
The US Dollar (USD) is a major currency that investors fall back on in times of global growth and trade uncertainties.
While US-China trade tensions remain a concern for markets this week, an unexpectedly cautious tone from the Federal Reserve last night has led to fresh global growth hopes and US Dollar weakness.
The Fed indicated it was unlikely to hike US interest rates again, dousing concerns about global central bank policy divergence and boosting hopes for growth outside the US. The Indian Rupee benefitted strongly from these factors today.
On top of this, the Indian Rupee was stronger as today’s Indian datasets beat forecasts. Indian industrial and manufacturing production results from October saw smaller contractions than forecast.
Pound to Indian Rupee (GBP/INR) Exchange Rate Outlook Dominated by Election Outcome
While some fairly influential Indian data will be published tomorrow, before markets close for the week, these are likely to be highly overshadowed by the results of Britain’s 2019 General Election.
Election results will come in throughout Thursday night, and will dominate Pound movement through the end of the week. This is likely to decide the direction for the Pound to Indian Rupee (GBP/INR) exchange rate as well.
If the election goes as markets bet and leads to a comfortable Conservative Party majority, the Pound could see a surge in demand and GBP/INR could end the week closer to multi-month-highs.
However, Sterling’s gains may be limited amid expectations for fresh Brexit uncertainty even in this outcome.
The Pound’s late-week performance will be even weaker if the election results in a tight race or a hung Parliament, as this would lead to fresh political uncertainty and cause no-deal Brexit fears to return.
Overall, the Pound to Indian Rupee (GBP/INR) exchange rate outlook will be dominated by UK politics in the coming sessions, but Indian data and global trade developments could influence the Rupee slightly as well.
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