The Pound has shed its gains against the Indian Rupee on Monday’s afternoon session, having dipped from an earlier rate of 82.0467 to a more recent 81.9845.
This decline comes after another negative response to the UK’s proposed deal on the rights of EU citizens. Commenting on Theresa May’s plans for EU citizens living in the UK, Brexit negotiators Michel Barnier and Guy Verhofstadt have both blasted the plan for being too unclear.
(First published 14:14, June 26th, 2017)
Pound Forecast: Rejection of Queen’s Speech could Trigger GBP Crash
The Pound has recently risen on political news, but this could also be Sterling’s undoing in the near-term.
On the positive side, Sterling’s value has risen on news that the Conservatives have finally reached an agreement with the Democratic Unionist Party (DUP).
This has at least resolved the issue of the UK’s immediate governance, but the two parties are soon to face their first real test.
The Queen’s speech last week had a mixed reception, but this week, the proposals contained within will be put to a vote in the Houses of Parliament.
The Conservatives and the DUP are expected to approve the plans out of principle, but it remains to be seen whether this will be enough in the face of potential Labour and SNP opposition.
Indian Rupee Predicted to Rally if GST Plan Pays Off
The Indian Rupee’s latest fluctuations against the Pound come days ahead of the implementation of a new tax system.
The Goods and Services Tax (GST) is due to come into effect on July 1st. The change is designed to simplify the Indian tax system, which is currently stretched to its limits over such a vast country with so many citizens.
Outlooks are mixed on the effect of GST – on the positive side, there are forecasts that the new tax system could boost Indian GDP by 2%. This would be due to greater revenue from previously missed taxable sources, which would grant the government more money to spend on infrastructure.
Less positively, there are concerns that implementing GST may throw numerous companies into chaos. One such forecast has come from Harpreet Singh, a KPMG Partner. Commenting on the logistics of putting GST into practice, Singh has said;
‘Right now it is all about IT-readiness. Companies might not even be able to file their first invoice on July 1. There is a lot of mess right now — the first few months are going to be chaos’.
If GST does pay off for the Indian government in the long term then the Rupee could rally, while if it seems to be a nationwide hindrance on business then a converse flop is possible.
Recent Interbank GBP EUR Exchange Rates
At the time of writing, the Pound to Indian Rupee (GBP INR) exchange rate was trading at 82.0467 and the Indian Rupee to Pound (INR GBP) exchange rate was trading at 0.0121.