Over the course of last week the Pound Sterling to Indian Rupee (GBP/INR) exchange rate fell from a high of 99.8827 to hit a low of 98.1724. Although Indian data was in short supply, demand for the Rupee and other emerging-market assets increased as the US published some comparatively upbeat data and the Federal Reserve offered assurances that interest rates will be adjusted at some point this year. Meanwhile, the Pound fluctuated against the majority of its most-traded currency counterparts in response to a mixed-bag of UK reports.
While Tuesday’s Consumer Price Index (CPI) showed that the UK entered deflation for the first time since 1960 – undermining demand for Sterling in the process – the UK’s Retail Sales data revealed an unexpected surge in consumer spending, with sales jumping 1.2% on the month rather than showing the more modest forecast improvement of 0.2%. The Bank of England (BoE) also published minutes which indicated that the central bank is becoming divided on the subject of interest rate revisions, with two members coming closer to voting for immediate rate hikes.
Indian data is lacking until Friday when the nation will publish a run of reports, including Infrastructure Output for April and GDP figures for the first quarter. Economists have forecast that the Indian economy expanded by 7.2% in the first three months of the year, year-on-year, down from annual growth of 7.5% in the final quarter of 2014. If that proves to be the case, it could put the Reserve Bank of India (RBI) under pressure to revise policy and cause the Rupee to decline.
Conversely, the UK’s annual first quarter growth figure is expected to be upwardly adjusted on Thursday, with year-on-year expansion being increased from 2.4% to 2.5% – this would be a Pound-positive development. Other UK data with the potential to inspire GBP/INR exchange rate movement includes the GfK Consumer Confidence Index for May. Economists are predicting that the measure held at 4, but given the wave of improved sentiment inspired by the Conservative party’s outright win of the UK general election, it’s possible that confidence actually improved. If that proves to be the case, the Pound to Indian Rupee exchange rate could end the week on a high.
Looking further ahead, the first week of June sees India publish several influential ecostats, including HSBC Manufacturing and Services PMI’s for May. Economists anticipate that both measures will show a decline in output. The RBI is also set to deliver its interest rate decision that week, with any adjustment in policy likely to have a notable impact on the Rupee’s performance.
On Tuesday the Pound Sterling to Indian Rupee (GBP/INR) exchange rate was trading in the region of 98.5800.