The pound to Indian rupee (GBP/INR) exchange rate has moved sideways in the past few days as investors wait for the upcoming Bank of England (BoE) interest rate decision. The pair was trading at 101.40 on Thursday, where it has been since the final week of October. It has dropped by more than 6% from the highest point this year.
BoE interest rate decisionThe GBP to INR pair will be in the spotlight on Thursday as the BoE deliver its monetary policy meeting. Economists believe that the central bank will follow the footsteps of the Federal Reserve and the European Central Bank (ECB).
The ECB left interest rates unchanged at the record high of 4.0% in its October meeting. In her statement, Christine Lagarde said that the pause was necessary as the bank observes the state of the economy.
The most recent European data shows that the headline consumer inflation dropped to 2.9% in October. Additional data revealed that the bloc contracted in the third quarter. Therefore, there is a likelihood that the bank will leave rates unchanged in the near term.
Similarly, the Federal Reserve decided to leave rates intact between 5.25% and 5.50%, the highest point in decades.
Watch here: https://www.youtube.com/embed/VzSn1lv2uxc?feature=oembedTherefore, the BoE will likely leave rates intact at 5.25%. Unlike the Fed and the ECB, the BoE is in a more difficult place since the country’s inflation remains above 6% while the economy is slowing.
Any more rate hikes by the BoE could have a negative impact on the British economy, which is going through a major slowdown. In a recent note, the International Monetary Fund (IMF) warned that the UK will be the slowest-growing economy in the G7.
India, on the other hand, is doing well, helped by the relatively cheap energy from Russia. The economy has jumped from $468 billion in 2000 to over $3.3 trillion. It recently passed the UK to become the 5th biggest economy in the world.
GBP/INR technical analysis
The daily chart shows that the pound to rupee exchange rate has been in a strong bearish trend in the past few months. The pair has moved below the 23.6% Fibonacci Retracement level. It has also crossed the 50-day moving average, signaling that bears are in control.
Therefore, the outlook for the pair is bearish, with the next important support at 100.22, the lowest swing on October 3rd. A break below this support will see it drop to the 50% retracement point at 96.50.
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