The current week has seen the Pound Sterling to Indian Rupee (GBP/INR) exchange rate steadily rise from a low of 96.4699 to a high of 99.3457, although the path to this position has been threatened by difficulties on all sides.
UK Referendum Draft Proves ‘Elephant in the Room’ This Week
Earlier in the week, the Pound failed to reach a really positive level given the pervading cloud of negativity surrounding the UK economy. One of the largest causes of this declining state was the UK Referendum, which has continued to be a detrimental force on the Pound’s value throughout the week.
Monday opened with the PM being given 24 hours to submit a draft proposal for the UK-EU Referendum terms, a deadline that many doubted that David Cameron would be able to keep. As it turned out, the PM was able to deliver a document to the European Council on Tuesday, which was in turn distributed to EU leaders. The problematic angle of the situation, however, was that many of the MP and MEPs that read the terms saw them as insubstantial and something of a capitulation on the part of the PM.
This issue was raised on Wednesday, when a number of MPs from Cameron’s own party questioned the sincerity of the PM’s conviction for what they saw as a wholly inadequate agreement. Yesterday, however, the Pound didn’t dive completely, mainly on account of the PM’s level-headed response to questions sourced from all corners of the House of Commons.
Sterling Crumbles Today as Bank of England (BoE) MPC Freezes Rates Unanimously
Today has seen dramatic movement for the value of the Pound in an overwhelmingly downwards direction. The trigger behind this abandonment of the UK currency by investors was the BoE interest rate decision, which was a 9-0 vote for an interest rate freeze.
While the lack of change wasn’t a fresh occurrence, the fact that established hawk Ian McCafferty finally had a change of heart was the last straw for investors, who promptly abandoned the Pound in droves and sent it crashing against the Indian Rupee and most other rivals. The development induced some investors to push their UK interest rate hike expectations far ahead to 2018.
Indian Rupee Hit by Unsupportive Oil Prices This Week
On the Indian Rupee’s side of the pairing, domestic data and commodity prices have been the determining factors for the Indian currency this week. Monday saw the nation’s manufacturing PMI for January rise from 49.1 to 51.1, although this was countered by infrastructure output in December falling from 2% to 0.9% on the year.
The big news has been the Reserve Bank of India Interest Rate Decision, which saw the central bank leave the rate at 6.75% in anticipation of the government’s annual budget statement which is due at the end of February.
Elsewhere, the price of oil has steadily risen since Tuesday, something that has been of no benefit to the Rupee.
Next Week’s GBP/INR Exchange Rate Forecast
For the remainder of this week and the week to come, Pound Sterling/Indian Rupee exchange rate movement may occur as a result of tomorrow’s Indian Deposit Growth figure for January, Monday’s Growth Rate figure from the same nation.
The only forecast for India’s data has been a rise from 7.34% to 7.49% for the GDP result.
From the UK, Tuesday will bring the December balance of trade figure, which was forecast to show a slight reduction in the deficit at the time of writing.
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