Over the past week, the Pound Sterling to Indian Rupee (GBP/INR) exchange rate was trending within the range of 98.7543 to 99.4812. The pairing fluctuated considerably as the week progressed, largely the result of Sterling volatility. Whilst speculation of a 2015 Bank of England (BoE) benchmark rate hike supported demand for the British asset, trader profit-taking and weak domestic data saw the Pound soften. Tuesday of this week saw the UK asset plummet versus its major peers after Chancellor George Osborne announced that a further £20 billion worth of cuts are needed to clear the budget deficit. By enforcing harsher austerity measures to reduce the budget deficit, Osborne risks stymieing economic growth and delaying a benchmark interest rate hike.
The Rupee’s fluctuations, meanwhile, were mostly the result of oil price shifts. Oil prices were significantly affected by news that Iran secured a deal to remove sanctions on oil production in return for curtailing its nuclear program. This meant that a significant amount of oil would be added to the global supply. As the world’s foremost oil importer, the Indian economy benefits greatly from low oil prices. However, Rupee weakness remained as a result of US Dollar strength and poor results from domestic data.
The Pound Sterling to Indian Rupee (GBP/INR) exchange rate rallied by around 0.5% during Tuesday’s European session. This was mostly the result of positive sentiment towards the BoE after minutes from the most recent policy meeting showed some Monetary Policy Committee (MPC) members are likely to vote for a hike in the August interest rate decision. The Rupee managed to gain versus many of its currency rivals, however, as oil prices continue to fall. Oil softened in response to news that US stockpiles unexpectedly rose.
Looking ahead, there are a couple of data publications due out over the coming week with the potential to provoke GBP/INR volatility. However, changes in the exchange rate will most likely be driven by oil prices and US Dollar strength. For those invested in the Indian Rupee; Foreign Reserves, Deposit Growth and Bank Loan Growth will be of interest. In terms of British data, Retail Sales will be of significance to see whether the combination of accelerated wage growth and ultra-low interest rates caused sales to advance.
The Pound Sterling to Indian Rupee (GBP/INR) exchange rate was trending within the range of 98.8960 to 99.4415 during Wednesday’s European session.