The GBP/INR exchange rate tumbled to the lowest level since 2020 as investors focused on the tumbling UK and European economies. The GBP to INR exchange rate has fallen in the past seven straight days, which is the longest losing streak in more than a month. It has fallen by 8.8% this year. The same is true for the EUR/INR exchange rate.
European and Indian economic divergence
The GBP/INR price continued its downward trend on Monday as the divergence between the UK and Indian economies widened. India is expected to be one of the fastest-growing economies this year as internal and external demand rises. The country has benefited from the recent sanctions on Russia by western countries. Now, the country is buying gas and oil prices at a substantial discount from Russia.
On the other hand, the UK and European economies have become a mess. Runaway inflation is happening after Russia decided to close the Nord Stream 1 gas pipeline during the weekend. Economists at Goldman Sachs believe that UK’s inflation will peak at about 20% in 2023. This figure will be much higher than the BoE’s target of 2.0%.
Sadly, this inflation cannot be defeated by high-interest rates by the Bank of England (BoE) since it is supply driven. In fact, some analysts warn that higher interest rates could make the situation worse by making it difficult for people to borrow money.
GBP/INR forecast
The daily chart shows that the GBPINR price has been in a strong bearish trend in the past few months. It has fallen in the past seven days straight. And as this happened, the pair managed to move below the important support level at $93.21, which was the lowest level on June 14.
The pair has also moved below the 25-day and 50-day moving averages while the Stochastic Oscillator has moved below the oversold level. Therefore, the pair will likely continue falling as sellers target the next support at 90. A move above the resistance at 93.21 will invalidate the bearish view.
