GBPINR trading tutorial

The GBPINR stands for Great Britain pound sterling and the Indian rupee forex pair in the currency market.

The cross is considered an exotic pair. Although, they combine a major and an extremely liquid currency with an emerging market.

Many traders shy away from exotics, but others see opportunities to widen their portfolio and increase their earnings trading it.

Several factors influence the exchange rate, and traders pay attention to these influences to profit from the pair.

Forex trading comes with risks, and less liquid pairs, such as exotic currency crosses are riskier than the majors.

Traders find a way around these risks by strategizing to spot the best opportunities to enter and exit this market instrument.

This tutorial offers useful suggestions on  how to trade the GBPINR and make a profit. We give a step-by-step guide on how to place a trade and examine the most suitable strategies for the pair. Find helpful tips on the best time to trade it and recommendations on a few brokers that offer the opportunity. 

It is essential that the trader understands the economies of both countries and the background of the currencies. That way, they know what makes the exchange rate rise or fall. Forecasting becomes doable once the trader grasps the concept of both currencies’ backdrops.

What is the GBPINR?

The GBPINR is the abbreviation for the British pounds and the Indian rupee in the forex market.

The pound is the base currency here and a major, while the rupee is the quote. It means the price listed against the pair is the amount of rupee you need to buy a pound.

For example, if the price quoted for the pair is Rs 100.07. This means you need this amount to exchange for £1.

So if you BUY the pair, you are speculating that the rate would increase. That is, the British pound will gain against the rupee. But if you take a SELL trade, you expect the exchange rate to decrease. Meaning that the Indian rupee strengthens against the pound.

Several factors cause the rates to rise or fall, and we will get into that shortly.

Background and history of the Pounds and Indian rupee

As of 1947, India was a free country in terms of independence and debt, it was a debt-free nation. Although, the country’s currency was tied to the British pound, being a former British colony.

The exchange rate at the time was 13INR to £1. 

Following the Brent Wood 1944 Agreement for all countries to peg their currencies to the USD, the Indian rupee became pegged to the dollar. Its exchange rate was 4.79INR to $1, and the dollar was worth £2.80 back then.

In the late 1940s, when India gained independence, the country needed funds to build its infrastructure and developmental projects. This led to a lot of borrowing, which reduced the value of the rupee further.

The two wars between China and Pakistan in 1966 made things worse for the Indian economy. It ate deep into the Indian budget and led the country into debt. This forced the government to further devalue the rupee, causing the exchange rate to climb to 65INR per £1.

In the last 8-years, the rupee has devalued further owing to inflation, high unemployment rates, and trade deficits, now trading between 99INR to 101INR per £1. 

Nowadays, the Reserve bank of India trades the forex market against the USD to ensure that the exchange rate remains relatively stable and less volatile. 

Despite these ups and down with its national currency, India remains among the most dynamic economies in the world.

Strong demands for its products and services, in addition to high industrial activities, added a 5% growth rate to its economy in recent years.

Britain is among its major trade partners, and India’s service sector plays a prime role in boosting its economy. Another important sector of its economy is its agriculture. The country is a leading exporter of fruits, such as lemon, limes, bananas, papayas, mangoes, etc. Forestry and fishing also contribute to its GDP. Chemicals and pharmaceutical products are also a big part of the economy. Diversification has caused the country to experience tremendous growth in the last 10-years. According to Investopedia, the World bank foresees a 6.9% growth in the Indian economy before the end of 2021. Investors around the world are now taking notice of this.

Factors that affect GBPINR exchange rates

Several factors influence the price of this forex crossing, as we mentioned. We will explain some of these factors below.

Central bank monetary policy

Central banks use monetary policies as a regulatory tool for the demand and supply of their currencies, thereby influencing the prices. The Reserve bank of India could do this by changing its interest rate. Increased interest rates can lead to a rise in the currency value as investors flock in to take advantage. The value can also drop if the interest rate is low. A low interest rate holds no appeal for investors.

The Reserve bank of India also trades the forex market against the USD to regulate the value of the rupee. 

Inflation

Inflation seriously affects the exchange rate of the GBPINR. When a country experiences little or no economic growth, yet there’s too much of its currency in circulation, it shoots up prices. People end up overpaying for goods and services. It indicates poor economic conditions and lessens the country’s national currency value. This also scares investors away. The central bank combats this by raising interest rates, motivating people to save instead of spend. Which then reduces the money in circulation. 

Economic data

The British pound currency value relies heavily on world economic data. This includes news releases relating to the countries that are its global trade partners. News data about the US economy might affect the pounds. Prices of important commodities, such as gold and oil will have an effect. Other economic information includes the two countries’ GDP, employment rate, trade surplus, or deficits. These economic data on both countries influences the exchange rate. Traders should also pay attention to political information in both countries, which can have a big impact on the GBPINR pair. For the pounds, news on Brexit is a must. For the rupee, internal conflicts and politics could decrease its demand, causing its value to drop.

Advantages and disadvantages of the GBPINR

The GBPINR comes with many ups and downs since it’s an exotic pair. Although, it offers reasonable opportunities too.

Below, we look at some of the benefits and drawbacks of trading this exotic pair.

Advantages of the GBPINR

Opportunity for increased profit 

A skilled trader using an effective strategy has the opportunity to cash in big with this pair. This is because as an exotic currency, the rupee can potentially make an unexpected swing upward. And through proper analysis, the trader can foresee this and take the advantage. 

Carry-trading opportunities 

Exotic pairs like the rupee often carry the potential for highly profitable carry-trades. The difference in the interest rates of both currencies makes it an appealing forex pair for this type of trading strategy. 

The disadvantage of the GBPINR

Low liquidity 

Like all other exotics, this pair might sometimes experience low liquidity. Its high volatility also makes it riskier than the major and minor forex crosses.

The best time to trade the GBPINR forex pair

An effective trading strategy is not complete without great timing.

The best time to trade is the period of high volume, which translates to favorable liquidity and volatility. 

For the GBPINR, this time is 8 AM – 11:30 AM GMT. The London market is open and active at this time. So is the Indian Stock exchange market. The market is active at this time, trading at high volume. It means that liquidity for the pair is high, translating to low spreads and lots of opportunities. 

Success with this pair will largely depend on the trader’s ability to match this timing with an effective strategy. 

We will discuss several strategies that fit this pair later in this tutorial. First, we will give a step-by-step guide to trading the GBPINR.

How to trade the GBPINR forex pair

We explain 3 basic steps to trading this pair successfully:

Step #1. Carry out a market analysis 

Market analysis involves looking at the GBPINR market to see its past and future trends. It would help you understand how the exchange rate moves. You would then determine what trading approaches would be best with the pair.

Step #2. Research the best strategies 

Plenty of information is available on forex trading strategies. Not all of these strategies would work with the pair, and the trader’s success greatly depends on this. Study different trading approaches. That way, you can find one or more that would be effective with the pair. We recommend a few below this page.

Step #3. Find a reputable broker

Success in forex trading depends a great deal on the broker you choose. Not all brokers have genuine licenses and provide standard service. Not all reputable brokers offer the GBPINR pair because it is an exotic currency pair. Some brokers focus more on majors.

Check these boxes below to ensure you choose the right broker:

Licensed by a well-known regulatory body

The broker should have proof of the licenses they hold. Traders can confirm a broker’s license on the regulatory organization’s website. Contacting the financial body is also a good idea to verify the broker’s genuineness. 

Competitive fees

Ensure the brokerage company’s spreads and fees are not above the market average. If it is, and it is a floating type, the fees can increase to a ridiculous sum. Causing the trader to pay more trading costs than necessary. This lowers profit and trading becomes pointless.

Free demo 

The broker must offer the opportunity to test its platform. The trader should use the chance to try out the strategies learned here. Some brokers do not allow some trading styles. This is a chance to Find out if the broker permits your trading style on its platform. Test the features and trading environment before proceeding with registration. 

Responsive support service 

Find out about customer support services. You need support that is responsive and resolves traders’ complaints. Reading reviews about the broker can give you an idea of their support service rating.

Payment methods

Ensure that the broker provides easy means to credit accounts and withdraw funds. Most importantly, make sure the payment methods provided are available and easy to use in your region. If not, trading can become frustrating and stressful.

Once you have checked all these boxes, you are ready to start trading the GBPINR pair.

Follow these steps to trade:

Complete the registration with your broker

Once you enter the required details on the broker’s website, a confirmation link is sent to your email to verify the details you provided. Click on the link and fill out the rest of the details requested. You might be required to upload some ID and proof of address. Once you do this, the registration is complete.

Deposit funds in the trading account

As we mentioned, the broker should provide accessible and easy-to-use payment methods in your region. This might include the following options:

• Visa
• Mastercard
• Wire transfers
• Paypal
• UnionPay
• Neteller
• Skrill
• Perfect money
• Etc.

There are many online and other payment methods. If they’re functional in your location, it should be easy to fund your new account. The funds you transfer should enter the account within minutes, and this should appear in full, no charges deducted. Except if the third-party payment company takes its fees from the funds. Some of them charge the fees separately. Most reputable brokers do not charge a dime for deposits and withdrawals.

Trade the GBPINR live

Once the funds appear in the account, you can start trading immediately:

• Click on QUOTE and select the GBPINR from the list.
• Read the quote to see the price and the spreads. 
• Take a position. Note that clicking on BUY means you expect the GBP to strengthen, thereby increasing the exchange rate. If you click on SELL, you believe the rupee will gain value against the pounds, meaning a decrease in the exchange rate.
• Close the trade. Timing is crucial, and this falls into the strategy with which you trade this pair. At the appropriate time, once satisfied that the position has matured, click on CLOSE or EXIT to end the transaction. Claim your profit or cut your loss.

Successful trades are a result of matching effective strategies with good timing. Time is a key part of any profitable trading approach. We share some of these strategies with you below.

The Best trading strategies for the GBPINR pair

Two things to bear in mind when trading any exotic pair:

They are more volatile than the majors

Exotic pairs do not see as much volume as minor and major currency crosses.

For instance, while a pairing like the GBPUSD might make up to 22% of the day’s transaction in the forex market, ones like GBPINR could make up only 1% or thereabout.

So the strategies that work for the high liquidity currency crosses may not always be applicable with this exotic pair.

Below, we discuss a few that yields profit with the GBPINR:

Breakouts trading strategy 

Breakout trading combines both technical and fundamental analysis to identify opportunities in the GBPINR price movements. Traders predict the next support or resistance point, then place a trade accordingly through this analysis. 

When you expect the price break to occur near resistance, enter a BUY trade. But if it is near support, take a SELL position. Once prices hit any of these points, volatility increases, and often times more than not, the price moves in the direction of the breakout.

However, there are times when breakouts could be false. This happens quite often, and inexperienced traders fall into the trap by rushing in.

Breakouts should be traded with caution. The way to do so is to first, put a stop-loss order slightly below the support or resistance zone you are capitalizing on. Then place your trade in the direction of the break.

To make sure you’re dealing with a genuine breakout, make sure the breakout candle is larger than the previous ones and has a full body. Then wait for the confirmation candle, a second candle that emerges in the same direction. It should be a smaller candle than the breakout one and close below it.

Technical traders use several chart patterns in breakout trading. Let’s look at one or more of these patterns and how they form.

Rising triangle 

Popularly called the ascending triangle, this pattern is an upward continuation pattern. It is made up of a rising lower trendline and a flat upper one. This indicates that there are more BUYERS in the market, causing the price of the GBPINR to reach new higher lows. The pattern develops fully when the price breaks out of the triangle and continues in the path of the initial trend. Hence, it is known as a continuation pattern, appearing in the middle of the trend.

This pattern can emerge in a downtrend or uptrend market condition. Its location determines how to trade the pattern.

If it appears in a downtrend market, it’s signaling a change in that trend. But it often emerges in an uptrend market as the price continues movement in its initial path.

To trade this breakout, the trader first identifies the pattern. Once they view a strong break above the resistance point, this is the signal for a LONG position. Stop-loss is then placed at the most recent price low before the break.

Wedge chart pattern

While the rising or ascending pattern is a continuation one, the wedge indicates a reversal in the price movement.

They are known as consolidation patterns, causing the prices to contract. The volume will also shrink as the pattern forms in the price charts. A wedge can take two forms, and we refer to it as a rising wedge or a falling one.

The wedge pattern indicates an extended consolidation phase and can emerge in an uptrend or a downtrend market. A rising wedge pattern emerges near the end-stage of an uptrend. While the falling wedge forms at the closing of a downtrend. 

The price moves that follow the break of the lower line within a rising wedge usually lead to the price reversing downwards. Conversely, within a falling wedge, the price moves that follow the break of the upper line often result in a price reversal upwards.

Traders take the appropriate positions at the point of these breaks. A rising wedge indicates an extended upward move in the price. A falling wedge tells us the opposite. Technical traders combine this pattern with the Bollinger band to confirm the overbought or oversold zones. 

That way, the signals are more reliable, and the trade has a higher chance of success.

Range trading strategy 

Exotic pairs like the GBPINR sometimes experience range-bound conditions. It is a situation where there are no established trends. Traders look for trading opportunities in the support and resistance zones in such market conditions. The use of chart patterns to confirm the best entry points is also essential here. Chart patterns, such as the triangle and wedge are common indicators used in this trading.

Carry trade strategy 

A carry trading strategy involves borrowing or selling the currency with the higher interest rate to buy the pair with the lower interest rate. You then make a profit on the interest rate differential.

This strategy involves fundamental analysis, and the trader should ensure the economies behind both currencies are currently positive and stable.

The trader also needs to identify the trend and make sure it favors the higher interest rate currency, in this case, the rupee. It will help determine how long is required to stay in the trade.

These strategies can potentially yield good profits with this pair if applied correctly. The trader must remember to use risk management as no trading approach is completely guaranteed.

Now, we will suggest a few brokers that provide quality brokerage service for trading this pair.

Top 2 brokers offering the GBPINR forex pair

FP markets

First Prudential Markets is a credible STP/ECN broker that accepts Indian clients and offers the GBPINR. They are regulated in Australia and the EU jurisdictions and are authorized by the Securities Exchange Board of India (SEBI). 

Unique features of the FP market

Flexible accounts

The broker operates a commission-free standards account with spreads, starting from 1.0pips for major pairs. A raw spread is also offered, where starting spreads for majors are 0.10pips and commission is $6 per round lot.

Top-notch Platform

Traders can use the Mt4 or Mt5 with this broker. Autochartist is accessible for free, together with a VPS and trader’s toolbox. Although, both require a minimum deposit of $1000.

Educational content and trading flexibility 

FP market is a flexible broker that allows different trading styles, such as hedging, scalping, and copy trading. Its education and research contents are rich and provide in-depth information for both beginners and existing traders.

FP markets overview

• Regulation – ASIC, CySEC, SVG FSA.
• Minimum deposit – $100
• Leverage – 30:1
• Assets – Forex and CFDs, indices, commodities, cryptocurrencies. 
• Payment method – Visa, Mastercard, Bank wire, Fasapay, Skrill, Neteller.  
• Support – 24-5
• Fees – Swap and withdrawal fees.
• Year founded – 2005
• Head office – Australia 

Cons of trading with FP markets

Withdrawal charges

Many reputable brokers do not charge withdrawal fees. This adds to trading costs and could lower the traders’ profit.

Capital.com

Capital.com is a well-known forex broker with its headquarters in the UK and was established in 2016. The broker is authorized by India’s broker regulatory body, the Securities Exchange Board of India (SEBI). So clients from this region are highly welcome and can trade the GBPINR. 

The broker offers commission-free trading accounts with competitive spreads and user-friendly platforms.

Unique features of Capital.com

Competitive fees

This is one of the reputable brokers charging low fees for its services. Traders can enjoy tight spreads and low costs of trading along with quality brokerage service.

Dedicated support staff

The broker assigns a dedicated account manager to clients that support the trader and resolves any issue that may arise during trading. This means support is easily accessible and responsive. Traders can then carry on their activities with peace of mind.

Top-grade trading platforms 

Traders enjoy a smooth and user-friendly platform on mobile phones and desktops. All features are accessible regardless of the device used. This makes the trading experience smooth-sailing and fun. 

Capital.com summary

• Regulation – CySEC, FCA, ASIC.
• Minimum deposit – $20
• Leverage – 1:30
• Asset – Forex, stocks, CFDs.
• Support – 24-5
• Trading platforms – Mt4, proprietary apps, and web platforms.
• Payment method – Credit and debit cards, bank transfer.
• Fees – none
• Year founded – 2016
• Head office – the United Kingdom. 

Cons of trading with Capital.com 

Withdrawals are not processed instantly

It could take up to 48-hours to process the withdrawal. This is longer than the average time for withdrawal processing in the industry. 

No cryptocurrency trading for UK clients

If you are based in the United Kingdom, you can not diversify investment to crypto trading with this broker. Most forex traders like to branch out to cryptocurrency. This could discourage them from signing up with the broker if they live in the UK.

Conclusion

The GBPINR presents a good opportunity to expand your forex trading portfolio. No matter where you are situated, as long as forex trading is legal there, you can partake in this opportunity. Although, trading the pair requires an understanding of both economies and an effective trading approach. The right broker is also a key determinant of success with this pair. Make sure your broker is authorized by SEBI if you are in India. In addition, they must be regulated by an acclaimed financial body in any of the western jurisdictions. Once you fulfill all the required elements that we have mentioned in this tutorial, you have a good chance of of trading the GBPINR pair successfully.

Frequently Answered Questions