The Pound (GBP) to Rupee (INR) exchange rate fluctuated around the level of 96.5300 on Tuesday as poor British CPI and an increase in risk appetite held Sterling back from making further gains.
Pound (GBP) Strengthens this Week on Decreased ‘Brexit’ Bets
Sterling enjoyed bullish movement on Monday as a new set of EU referendum polls revealed an increasingly strong lead for the ‘Remain’ campaign in telephone polls.
The Telegraph and The Guardian both released the results of May phone polls, showing that an increasing amount of people asked were more likely to vote ‘Remain’ than ‘Leave’.
However, a web poll conducted by The Guardian revealed a lead for the ‘Leave’ campaign, with 47% wanting to ‘Brexit’ and 43% wanting to ‘Remain’.
Regardless, the increasing strength of the ‘Remain’ camp in phone polls boosted Sterling upward.
Poor UK CPI Slows Sterling’s Rally
Britain’s highly anticipated April Consumer Price Index (CPI) report disappointed investors when it released on Tuesday morning.
The month-on-month figure was expected to merely slow from 0.4% to 0.3%, but instead dropped to 0.1%. The yearly print fared little better, with the expectation of being held at 0.5% being undermined by a drop to 0.3%.
However, this didn’t send the Pound plummeting as various economists had predicted that March’s high air fare prices and Easter spending would not translate into April’s scores.
Other reasons for the inflation slowdown cited by the Office for National Statistics (ONS) included lower prices of clothing, which had previously been high in March due to surprisingly cold weather.
Indian Rupee (INR) Stabilises as Higher Risk is Offset by Oil Import Issues
Recent shortages in oil supply have seen the commodity’s prices rally in the last two weeks, with prices of oil reaching six-month-highs of around US$50 per barrel.
While this led to risk-sentiment increasing and sending most risk-correlated currencies higher, the emerging-market Indian Rupee suffered as India is one of the world’s biggest importers of crude oil.
The strengthening US Dollar also put pressure on the Rupee and left it relatively unappealing in the risk market. As a result, the Rupee struggled to take advantage of risk-on movements that other risky currencies currently enjoyed.
Indian data may have helped to bolster the Rupee however, as Monday’s session was largely positive. Wholesale price index inflation improved from -0.85% to 0.34%, beating out forecasts of -0.3%.
GBP/INR Exchange Rate Forecast
Wednesday’s session includes multiple opportunities for the GBP/INR’s recent strength to be reversed as investors focus on the morning’s UK employment data.
If the ILO unemployment rate or jobless claimant count rate rise despite being expected to hold steady, Sterling will face pressure from rival currencies.
Wednesday evening sees the release of the Federal Reserve’s Federal Open Market Committee (FOMC) minutes from its May meeting, and a dovish tone in the report could lead to the risky Indian Rupee recovering.
Oil prices are also likely to continue to affect the Rupee’s movement. If prices continue to rise past US$50 per barrel, INR will likely suffer as a result.