GBP/INR: Headwinds Mount for the Rupee on Rising Middle East Tensions

The Indian rupee continued to decline against the British pound in a broad sell-off in Asian emerging market currencies this week following the US airstrike on Qassem Soleimani, an important Iranian military commander.

The Indian rupee has been on the back-foot against the British pound for months after the RBI cut rates five times last year to spur domestic demand and support a slowing economy. The central bank kept rates steady at 5.15% at their latest meeting in December.

Rising oil prices in the New Year have additionally hit the Indian currency since India is heavily dependent on oil passing through the Strait of Hormuz.

Markets are now concerned that rising tensions in the Middle East and a possible Iranian retaliation could hinder the passage of oil through the important waterway.

Although the Indian rupee gained on the prospects of a trade deal between the US and China, any gains seem short-lived since a new conflict in the Middle East would heavily weigh on the currency.

Furthermore, the RBI’s buying of 10-year bonds in an attempt to push down yields has also been a headwind for the Indian rupee.

In the UK, Prime Minister Boris Johnson is expected to kick-start trade negotiations with the EU while hosting EC President Ursula von der Leyen in London on Wednesday. Any progress on that matter would be positive for the pound, but risks of a “no deal” Brexit still weigh on the currency.

From a technical standpoint, the GBP/INR pair continued to trade inside a healthy uptrend and near multi-month highs, although a strong bearish divergence was forming between the price and the RSI.

The December 13 high of 95.37 still acts as an important short-term resistance level, while the December 23 low of 91.99 could provide some buying pressure for the pair. As of 11:24 a.m. London time, the rupee traded at 94.44 against the pound. is a news site only and not a currency trading platform. is a site operated by TransferWise Inc. (“We”, “Us”), a Delaware Corporation. We do not guarantee that the website will operate in an uninterrupted or error-free manner or is free of viruses or other harmful components. The content on our site is provided for general information only and is not intended as an exhaustive treatment of its subject. We expressly disclaim any contractual or fiduciary relationship with you on the basis of the content of our site, any you may not rely thereon for any purpose. You should consult with qualified professionals or specialists before taking, or refraining from, any action on the basis of the content on our site. Although we make reasonable efforts to update the information on our site, we make no representations, warranties or guarantees, whether express or implied, that the content on our site is accurate, complete or up to date, and DISCLAIM ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Some of the content posted on this site has been commissioned by Us, but is the work of independent contractors. These contractors are not employees, workers, agents or partners of TransferWise and they do not hold themselves out as one. The information and content posted by these independent contractors have not been verified or approved by Us. The views expressed by these independent contractors on do not represent our views.