DB EM FX Trade Idea of the Week – May 18th – FXWW Chatroom

Short GBP/INR, target 96.80, stop 100.75. 

The sharp rally over the past month has taken GBP/INR into overbought territory compared with interest rate differentials, relative equity market strength and broader USD developments. This is consistent with FX technicals, with GBP/INR at or close to overbought levels on RSI and Bollinger bands.  Over the slightly longer-term a current account deficit worth 5.5% of national income means the UK is more dependent on inflows of foreign capital than most other major economies. Meanwhile the Indian narrative remains positive, the C/A remains on a favourable path, real rates remain high and growth is relatively solid. 

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