The Pound’s rally against the Indian Rupee continued during this week’s session on lowered ‘Brexit’ bets and mixed risk sentiment, however the Rupee’s strength could be inspired by today’s Fed announcements.
Pound Rally Continues, Rupee Weighed Down by Fed Worries
April’s GBP/INR movement can be largely attributed to worsening risk appetites and a shift in consensus for the outcome of Britain’s upcoming EU referendum.
The pair has advanced significantly in April, hitting a low of 93.4817 in the month’s first week before climbing as high as 97.2775 on Tuesday. The pair is currently up about 0.2% and trends in the region of 96.9570.
The Pound’s rally against the Rupee has been one of its most bullish, beginning on news that a major steel plant owned by Indian company Tata Steel had found a buyer earlier this month.
Sterling strength only continued after polls suggested that a ‘Brexit’ was increasingly unlikely.
Solid UK GDP Bolsters Sterling (GBP) Rally
Data released in Wednesday’s session inspired further confidence in Sterling, following a huge boost from lowered ‘Brexit’ bets last week.
The latest Gross Domestic Product (GDP) report confirmed forecasts that British growth had slowed to 0.4% in Q1. As this was expected, it did little to shake Pound sentiment.
More positive was the key year-on-year print, which beat forecasts of 2.0% by holding steady at 2.1%.
Sentiment was boosted further by details released by the Office for National Statistics that claimed ‘Brexit’ concerns did little to hurt the result.
Indian Rupee (INR) Steadying, Indian Economy Recovering on Cheap Oil
Mixed risk-sentiment has been largely negative for the Indian Rupee (INR), as such the emerging market currency has been weighed down considerably by recent commodity news.
However, unlike more commodity-correlated currencies, the drop in oil prices is beneficial for the Indian economy and currency.
Bloomberg reports
that 2016’s worryingly low oil prices have in-fact allowed India to lighten its trade budget deficit considerably. The same report mentioned that the traditionally volatile Indian Rupee had been less volatile in April.
Adding to Rupee sentiment was a positive outlook for India’s credit rating and growth, according to
The Statesman
.
GBP/INR Forecast: FOMC Rate Decision to Influence Exchange Rate Ahead of Data
The biggest imminent influence to the Pound and Indian Rupee exchange rate is set to be tonight’s Federal Open Market Committee (FOMC) decision.
The Federal Reserve is currently expected to agree to leave rates frozen, however indications to a delayed rate hike or a sooner-than-expected rate hike is certain to inspire risk-correlated movements.
As an emerging-market currency, the Indian Rupee could regain considerable strength against the Pound if rate hike bets are pushed further back and markets take risk-on attitudes.
Data is quiet for the rest of the week, with the British GfK consumer confidence survey due for release on Friday morning.
Indian data remains quiet until next week, when the nation’s Manufacturing and Services PMI reports are due to be released by Nikkei.