While last week was marked by an exceptional shortage of Indian data, the current week has started on a strong positive note for the Indian Rupee, which has posted gains against Pound Sterling due to its economic data releases so far. Last week, Sterling ended on a high note against the Rupee, having previously risen from a low of 94.6292 to a high of 96.5807 by the close of Friday’s European trading session.
Pound Sterling Previously Moved by Bank of England (BoE) Grilling
Last week, a sizable portion of the Pound’s exchange rate movement came on Tuesday, when BoE policymakers Mark Carney and Jon Cunliffe were questioned by MPs over what effects they thought the UK Referendum was having on the UK economy.
Both men were quick to point out that a ‘Brexit’ was uncharted waters and that the sheer uncertainty surrounding the UK’s potential exit from the EU made it a threat to economic stability. In response, some MPs accused the BoE of breaking neutrality and taking the side of the ‘Remain’ campaign in the debate, with fewer still MPs calling for Carney’s resignation.
Carney immediately refuted the claims, but the event only served to amplify the polarising effect that the Referendum is currently having on the situation in the UK.
Sterling Stable as Budget Speculation Dominates Headlines
The Pound has been able to make progressive gains against most of its peers recently, barring against the rising Indian Rupee.
No data has been released lately, but Sterling has nonetheless appreciated on a potentially supportive ‘Help to Save’ scheme put forward by the Government, which has already attracted interest and criticism from all sides.
Indian Rupee Advances as Falling Inflation comes in Line with Targets
While reduced inflation is generally considered negative among investors, for India’s overinflated economy, the recent reduction from 5.69% to 5.18% on the year in February has shown a sizable step towards the current targets. These are for a rate at around 5% by March 2017, with a further reduction of 4% desired for 2018.
This Week’s GBP/INR Exchange Rate Forecast
For the present week, Pound Sterling/Indian Rupee exchange rate movement may occur as a result of Tuesday’s Indian balance of trade for February, Wednesday’s UK employment, claims and earnings figures and the UK budget announcement, which is also due on Wednesday. After that, the most notable event will be Thursday’s BoE interest rate decision, which is forecast to result in a freeze at 0.50%.
India’s current trade deficit is forecast to expand from -7.64bn to -9.1bn on Tuesday morning, while Wednesday morning’s range of UK stats are broadly expected to come out positively for the UK economy.
At the time of writing, the budget was expected to spell trouble for the short-term appeal of the Pound, with cuts and tax adjustments featuring prominently in Wednesday afternoon’s announcement.
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