INR/GBP Outlook:
Bearish, as the INR is below its recent average and near the lower end of the 3-month range.
Key drivers:
• Rate gap: The Reserve Bank of India (RBI) maintains lower rates compared to the Bank of England (BoE), which is currently on hold.
• Risk/commodities: Recent fluctuations in oil prices are pressuring the INR due to India's heavy reliance on crude imports.
• Foreign investment: Increased selling of Indian assets due to global risk aversion is contributing to the rupee's depreciation.
Range:
The INR/GBP is likely to drift within the recent range, continuing to test lower levels.
What could change it:
• Upside risk: A sudden rebound in FDI (Foreign Direct Investment) could support the INR.
• Downside risk: Further geopolitical tensions could increase uncertainty and pressure the rupee further.