GBP/INR Slightly Down Ahead of Bank of England Meeting

GBP/INR is declining in early trading on Thursday, wasting yesterday’s gains. Currently, one British pound buys 91.167 rupees, up 0.11% as of 6:18 AM UTC.

Judging by the 3-hour timeframe, the pair moves in a sideways channel that started in mid-October. The price is right between the resistance and support lines of the channel right now.

The British pound is under pressure as it awaits the Bank of England’s interest rate decision later today. Besides this, the election campaign officially started yesterday. UK Prime Minister Boris Johnson promised to “get Brexit done” in January if re-elected.

Bank of England to Leave Rates Unchanged

The Bank of England (BoE) will likely keep the interest rates unchanged, most economists agree. Investors will focus on the voters to see if any policymaker is open to easing.

Given the early election planned for December 12 and the new Brexit deadline set for January 31, the bank will avoid revealing in which direction interest rates are moving.

US FED and the ECB cut their interest rates amid a global slowdown caused by the Sino-US trade conflict. The BoE has resisted so far.

Economists polled by Reuters expect the BoE’s Monetary Policy Committee to vote 9-0 to maintain the rate at 0.75%. Nevertheless, more economists believe the central bank will cut rates at some point next year.

Rupee Will Struggle Amid India’s Economic Slowdown

While the rupee is currently strengthening against the GBP, India’s slowing economy won’t allow its national currency to recover year-to-date losses against majors, including the pound, according to a Reuters poll. The increased hopes of a trade deal between the US and China are not sufficient to boost rupee.

The multiple rate cuts from the Reserve Bank of India (RBI) and the government’s fiscal stimulus haven’t done anything to revive the economy.

Rini Sen, India economist at ANZ bank, explained:

“We expect the INR to weaken as risks of sluggish growth and fiscal slippage intensify. Stable portfolio flows led by equities and global cues like trade negotiations, on top of rate cuts, have led to bouts of optimism. However, we think the currency market is under-pricing downside risks to domestic growth.”

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