The GBP to INR rate dropped 0.81% this Tuesday after the Indian Rupee racked up gains among its peers on the back of a drop in crude oil prices and an inflow of foreign portfolio funds into the local equities market.
The Rupee gained against the Pound for the third session in four, propelled by a rise in the emerging market currency after a drop in demand for the US Dollar following the Fed’s 75bps rate hike last week. Market participants perceived the hike as an underwhelming response to raging US inflation.
The market expects the Fed to adopt a more dovish stance on its monetary policy adjustments in the coming months. This is a Rupee +ve situation. Exporters banking on selling off foreign currency holdings at higher Rupee prices have also been caught on the wrong end of the stick, prompting liquidations from this segment that is also boosting the local currency.
The 3-day drop in crude oil prices as OPEC + signals an increase in production quota is also boosting the Rupee, which shares an inverse correlation with oil prices as the currency of the 3rd largest crude importer. There has also been a significant inflow of foreign portfolio capital and foreign investor funds into India recently. The recent 5G telecom auction is one event that has attracted these forex inflows, causing a slide in the GBP to INR rate.
GBP to INR Forecast
The pair is challenging the 95.9710 support level (18 May low and 21 July high). A breakdown of this level gives the bears access to the 21 July low at 95.0820. Additional harvest points for the bears reside at the 15 July low (94.3257) and at 93.3643, where the trough of the 14 June candle is found.
On the flip side, a bounce at 95.9710 gives the bulls a chance to take on the resistance at 96.7565 (1 June low and 28 June high). 98.1735 (30 May high) and 98.7015 (11 April low) serve as additional targets to the north.