GBPINR Prediction: Pair Flashes Red On UK Tax Hike Sentiment, India Growth Forecast

Summary:
• The GBPINR trading pair is under pressure following British PM's announcement of impending tax hikes, but there's much more at play.

GBPINR lost further ground on Thursday, with the Indian rupee boosted by the latest credit ratings by Moody’s and Fitch. The pair was at 110.39 as of this writing, down by 0.3 percent on the daily chart. The move is another disruption to the GBPINR pair’s upside momentum, that stretches bacxk to August 8.

Despite encountering headwinds recently, the pound is still at +0.4 percent in the last 5 trading sessions and +2.4 percent against the rupee in August, signaling a potential bullish undercurrent. GBPINR is also finding its footing following British Prime Minister Keir Starmer’s announcement that the government intended to raise taxes from October. That has raised concerns that restrictive tax regime coming after a prolonged period of high interest rates could create a bottleneck for the UK economy.

Meanwhile, Moody’s raised its growth forecasts for India’s economy in 2024 from the initial rate of 6.8 percent to 7.2 percent. Similarly, the credit rating agency estimates that the world’s fifth-largest economy will grow by 6.6 percent in 2025, up from its previous projection of 6.4 percent. Elsewhere, Fitch retained its stable outlook for Indian Government bond issuance, keeping a “BBB-” rating, on strong medium-term growth outlook. This will add near-term pressure on GBPINR.

Momentum indicators

The 4-hour GBPINR signals a likely conntinuation of the downside trajectory. The price has been below the middle Bollinger Band for a while, and is attempting to break below the lower band near the 110.32 level. In addition, the signal line is above the MACD indicator line, adding weigt to the donside view.

GBPINR forecast

On the 30-minute chart below, GBPINR will likely continue to the downside if resistance persists at the 110.35 pivot level. With the downward momentum, we are likely to see the first support at 110.20. However, extended control could enable a breach below that mark to test the second support at 110.00.

On the other hand, moving above110.35 will favour the buyers to take control, with the first resistance could come at 110.55. If the bulls extend their control, the resulting momentum could break above that barrier and test 111.70.