Better-than-Forecast UK Public Borrowing Data Fails to Support Pound Sterling Exchange Rates
The Pound to Indian Rupee exchange rate experienced little movement following the publication of comparatively upbeat UK public borrowing data, and the pairing later fell 0.45%.
Pound Sterling (GBP) Exchange Rates Briefly Gain on Borrowing Data
Pound Sterling (GBP) exchange rates experienced a short-lived rally this morning as the UK’s latest public borrowing data beat expectations.
According to figures released by the Office for National Statistics (ONS), the UK government borrowed £8.7bn to balance the books in November, a smaller figure than anticipated.
This led to the public deficit rising to £48.1bn year-to-date in the 2017⁄18 fiscal period,
£3.1bn lower than at the same point last year, and the lowest year-to-date borrowing figure since 2007.
However, the Office for Budget Responsibility (OBR) warns that public sector borrowing is still likely to exceed the government’s targets this year as the jump in January’s self-assessment tax receipts is unlikely to be repeated in 2018.
Analysts also suggest that the ongoing uncertainty surrounding Brexit is likely to hamper growth over the coming years, which may also knock the government’s deficit reduction targets off track.
John Hawksworth, chief economist at the accountancy firm PwC, said;
‘Further progress on reducing the budget deficit may be slow over the next couple of years as Brexit-related uncertainty drags on UK growth, which we expect to lag some way behind both the US and the Eurozone in 2018 and 2019.’
GBP INR Exchange Rate Down Despite Narrowing UK Public Deficit
The GBP/INR exchange rate was little changed after the UK’s borrowing data was published.
The Indian Rupee in on track to emerge from 2017 as one of the best performing emerging market currencies after consistently returning the highest yield amongst its Asian peers this year.
This is largely on the back of India’s strong economic recovery over the last twelve months, with growth being bolstered by confidence in the Reserve Bank of India’s monetary policy and the government’s economic reforms.
The Rupee’s stellar performance this year should validate Prime Minister Narendra Modi’s decision later last year to demonetise 80% of the nation’s currency while also snapping a six-year losing streak for the Rupee.
GBP INR Exchange Rate Forecast: UK GDP Figures to Confirm Rise in Q3 Growth?
Looking ahead to the end of the week, the GBP INR exchange rate may be able to build on today’s gains with the release of the UK’s latest GDP figures.
The final reading of Britain’s third quarter GDP is expected to confirm that the UK’s economic growth rose from 0.3% to 0.4% in the three months to September likely strengthening the Pound.
However Sterling sentiment could still tumble as the accompanying business investment figures are forecast to reveal a notable drop in investment growth over the same period.
Meanwhile the Indian Rupee may tick higher tomorrow if the weakened US Dollar (USD) allows the currency to strengthen again.