Before analysing the price movement of the Indian Rupee versus Sterling, it is useful to note that the Rupee is not a freely floating currency. This is captured in a quote from the RBI governor who claims that “foreign exchange rates are influenced by market forces and the RBI”. This fact has the potential to make GBP/INR harder to analyse from a technical perspective.
GBP/INR has broken away from the tight range that was established at the beginning of the year between 68.89 and 74.23, reaching 77.66 so far this year.
This movement away from the 200 day moving average has begun to form a rising wedge, as seen in the daily candlestick chart to the left. Typically these formations are associated with a weakening of the prior rising trend, with scope for a pullback or outright reversal.
This pattern follows a period of RBI rate hikes that have been administered in order to lower inflation rates, in particular food price inflation. So, despite a rising base rate, the Indian Rupee has been steadily falling versus Sterling for the majority of the year due to inflation fears. At the very least, we can say that the trend of GBP/INR has been to the upside . However, this hiking cycle is probably coming to an end as slower growth rates are expected to temper inflation expectations. This may thus trigger a period of Rupee strength as the potential for a controlled inflation environment brings back the return of speculative investment flows.
GBP/INR has broken away from the tight range that was established at the beginning of the year between 68.89 and 74.23, reaching 77.66 so far this year.
This movement away from the 200 day moving average has begun to form a rising wedge, as seen in the daily candlestick chart to the left. Typically these formations are associated with a weakening of the prior rising trend, with scope for a pullback or outright reversal.
This pattern follows a period of RBI rate hikes that have been administered in order to lower inflation rates, in particular food price inflation. So, despite a rising base rate, the Indian Rupee has been steadily falling versus Sterling for the majority of the year due to inflation fears. At the very least, we can say that the trend of GBP/INR has been to the upside . However, this hiking cycle is probably coming to an end as slower growth rates are expected to temper inflation expectations. This may thus trigger a period of Rupee strength as the potential for a controlled inflation environment brings back the return of speculative investment flows.
