The Pound has seen pretty sharp sell-off recently. Here's the daily chart since June 2015
The current sell off needs to be seen in bigger context. The Pound is now near 15 year low.
Here's the GBPUSD weekly Chart
As you can see in the chart above: In last 15 years - GBPUSD has never breached 1.37. It twice touched that level: once in CY 2001 and then again in CY 2009. It has once again declined near that level.
Why is Pound declining?
BREXIT: The prospect of a UK exit from the European Union. This fear has gained momentum as more and more politicians in the UK are campaigning for Britain to leave the European Union in a June referendum. Now, it's anybody's guess what will happen in June referendum - but here are two scenarios
- If Britain quits the EU the pound may fall to $1.15-$1.20 - Goldman Sachs
- If Britain remains with EU, then Pound will jump to $1.60 by year-end ~ HSBC
Has the British Pound decline helped INR to strengthen?
Yes, in short term but not in bigger picture
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Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers