We have initiated a following Sell call in GBP/INR pair on December 14, 2012
Sell GBP/INR at the spot rate of Rs8,777 (January futures at Rs8,822). Target Rs8,330. Time frame: six to nine months
Rationale behind the Sell trade in GBP/INR We expect the British pound to weaken against the US dollar, while we have turned positive on the Indian rupee.
Specific reasons behind the Sell call on this pair are mentioned below:
Relatively stronger growth in the USA over the UK.
Growing current account deficit in the UK.
Bank Of England (BOE) may go for quantitative easing (QE).
One-in-three chance of the UK AAA rating downgrade.
Lack of negative news flows out of Europe means that the pound is unlikely to attract safe haven inflows as has been the case for the past two years.
The rupee to remain relatively strong on funds inflow, pro-reforms and Reserve Bank of India (RBI) rate cut.
