GBP/INR Outlook:
The GBP/INR outlook is slightly positive but likely to move sideways, as the rate is above its recent average but lacks a clear driver for significant movement.
Key drivers:
• Rate gap: The Bank of England's potentially dovish stance contrasts with the Reserve Bank of India's more flexible approach, affecting GBP strength.
• Risk/commodities: Ongoing volatility in oil prices pressures the INR due to India's heavy reliance on oil imports.
• One macro factor: The persistent current account deficit in India creates downward pressure on the INR amid global economic conditions.
Range:
Expect GBP/INR to hold steady within its recent range, as there is limited momentum for extremes.
What could change it:
• Upside risk: A stronger-than-expected GDP report from the UK could boost the GBP.
• Downside risk: Continued FPI outflows from India could lead to increased depreciation of the INR.
