Pound Could see Near-Term Strength Against Indian Rupee Extend

Sterling has lost ground against the Rupee due the uncertain political outlook in the UK.

The Rupee meanwhile is meanwhile seen benefiting as India attracts foreign capital inflows from investors seeking out the return on its high interest rates.

From a technical perspective, the advantages of the Rupee over the Pound are reflected in the medium-term downtrend seen on GBP/INR but in the shorter-term the chart looks quite chaotic and its difficult to determine where next we might be going.

To help us, we turn to technical analysis which involves reading charts and using technical indicators and potentially more objective criteria for deciding the direction of future fluctuations.

Looking at the charts we see the Pound to Indian Rupee exchange rate has just completed a classic a-b-c correction following the establishment of the May highs above the 84.00 level.

This pull-back has now completed and it is possible the pair will now be readying for a move higher as it resumes its short-term uptrend.

A resumption higher would gain traction from a break above the trendline ‘A’ confirmed by a break above 82.50, with a target at 83.00.

The combination of the 50-day and 200-day at that level, however, would probably resist further gains.

Alternatively, a break below the correction’s c-wave lows at 81.20 would confirm a new short-term downtrend was probably starting.

Such a break would be likely to reach 80.50 initially, possibly even lower.

The dominant medium-term trend is down; the dominant longer-term trend is up.