Jump in UK Manufacturing Lifts Pound Sterling Indian Rupee (GBP/INR) Exchange Rate

UK Production Results Impress, Boost Pound to Indian Rupee Exchange Rate

Better-than-expected UK productivity figures did little to lift the Pound (GBP) against major currencies on Wednesday with one notable exception being the Pound to Indian Rupee (GBP/INR) exchange rate.

GBP/INR opened the week at 85.94 and has since continued to edge higher. On Wednesday the pair touched on a one week high of 86.36.

Flat Indian Rupee (INR) trade has made it easier for Sterling to advance on Wednesday, as UK production data largely beat expectations.

Manufacturing production came in at a positive 0.4% month-on-month and 3.5% year-on-year, while industrial production printed at 0.4% and 2.5% respectively.

All these figures beat expectations and indicated to investors the manufacturing sector likely provided a bigger fourth quarter boost to the UK economy than had been expected.

The latest UK Gross Domestic Product (GDP) forecast from the National Institute of Economic and Social Research (NIESR) was also higher than expected. The think tank is forecasting that UK growth will print at 0.6% in Q4 2017, higher than the analyst consensus prediction of 0.5%.

Indian Rupee (INR) Exchange Rate Volatility Likely after Inflation Stats

The Indian Rupee (INR) has been lacking in momentum during recent sessions as a dearth of data has given investors little reason to move on the currency. According to market expert Pramit Brahmbhatt at Veracity: ‘The Rupee will trade on a flat note in absence of any cue.’

The prices of major commodities such as oil have continued to rise since the start of the year, weighing on market appetite for emerging-market currencies such as the Rupee.

INR traders are also hesitant to move in anticipation of key Indian data.

Friday will see the publication of India’s December Consumer Price Index (CPI) results, as well as November’s industrial and manufacturing production stats, with more data due for publication next week.

Pound to Indian Rupee (GBP/INR) Exchange Rate Forecast: UK Inflation Stats Next Week

The Pound to Indian Rupee (GBP/INR) exchange rate’s recent advance could be reversed if forthcoming Indian data makes the Rupee more appealing. Nevertheless, Sterling could see fresh support next week if key UK inflation stats are higher than expected.

Next Tuesday will see the release of Britain’s Consumer Price Index (CPI) report for December. Consumer price pressures are forecast to have slowed from 0.3% to 0.2% month-on-month and from 3.1% to 3% year-on-year.

If the inflation figures do come in above expectations, the Pound may continue to climb against the Rupee amid hopes that it could pressure the Bank of England (BoE) to take a more hawkish stance on monetary policy.

However, weaker than expected inflation figures would help alleviate some of the pressure on UK consumers, so on-forecast figures may not inspire Sterling losses.

Other notable UK data due next week includes Friday’s UK retail sales results from December.

The Indian Rupee, on the other hand, is likely to be influenced by commodity news and upcoming ecostats.

Next week’s Indian data includes the trade deficit update from December, as well as the Wholesale Price Index (WPI) inflation print from the same period.

Luke Trevail

Luke studied Journalism at university but quickly moved into the financial sector, initially working in retail banking before joining TorFX in 2007. As a Senior Account Manager Luke assists in overseeing the management of the company’s exposure to currency volatility. He uses his years of foreign exchange experience to produce regular news updates exploring the latest currency movements.

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