Pound to rupee (GBP/INR) analysis as UK inflation expectations slips

December 08, 2023 01:05 AM PST | By Invezz
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The GBP/INR exchange rate was flat on Friday after the latest RBI interest rate decision and after encouraging UK inflation expectations numbers. The pair was trading at 104.67, a few points below this week’s high of 106.05.

UK inflation expectations fall

There were two important catalysts for the pound to rupee pair. First, the Reserve Bank of India (RBI) delivered its final interest rate decision of the year. As was widely expected, the bank decided to keave interest rates unchanged since it is winning its battle against inflation. It has left rates unchanged in the past six meetings.

The central bank believes that the Indian economy will continue doing well in the coming months. It expects that the economy will grow by 7% in 2023, up from the previous guidance of 6.8%. Inflation, on the other hand, is expected to average about 5.4% in 2024, mostly because of high vegetable prices. In a note, an analyst at Kotak Mahindra said:

“The RBI policy is continuity of the good work done in the past. Inflation within target range, yet the vigil is on. Growth revised upwards. Financial system healthy and pushed to stay ahead of the curve on digitisation.”

The GBP to INR pair also reacted to the latest UK inflation expectations data. According to the Bank of England (BoE), inflation will average at about 3.3% in 2024, down from the current 4.7%. While the figure is still above the Bank of England target of 2.0%, it was the lowest level in about 2 years.

The BoE has worked hard to bring the country’s inflation from over 10% in 2022 to the current 4.7%. It has done that by hiking interest rates several times, which has pushed them to the highest point in decades. Andrew Bailey, the embattled BoE governor, has maintained a hawkish tone.

GBP/INR technical analysis


GBP/INR chart by TradingView

The daily chart shows that the pound to rupee exchange rate has been in an uptrend in the past few weeks. In this period, it has rallied from about 100 to 104.80. The pair remains between the first and second support levels of the Andrews pitchfork tool. 

It has also moved above the 50-day moving average and the 23.6% Fibonacci Retracement level. Therefore, the outlook for the pair is bullish, with the initial target to watch being last month’s high of 106.07.

The post Pound to rupee (GBP/INR) analysis as UK inflation expectations slips appeared first on Invezz


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