Pound to Indian Rupee (GBP/INR) Exchange Rate Forecast: Sterling Drops as Indian Mining and Manufacturing Forges Ahead

Poor UK Inflation Rate Figures Cause GBP/INR Exchange Rate Losses

The Pound (GBP) has fallen slightly against the Indian Rupee (INR) today, following the news that UK inflation rates have remained unchanged in May.

This has left the GBP/INR exchange rate at a level of 90.17, an average for the week and above the low of 89.67 seen on Monday.

For GBP traders, the issue is that year-on-year inflation had been forecast to rise, instead of reprinting at 2.4%.

Higher inflation would have put pressure on the Bank of England (BoE) to consider hiking interest rates in 2018.

Instead, Pound Sterling investors have had two doses of disappointment, with the inflation data following Tuesday’s news of a surprise wage growth slowdown in April.

 

Indian Rupee to Pound (INR/GBP) Exchange Rate Rises on Manufacturing Sector Strength

There has been limited Indian economic news out today, but the Indian Rupee (INR) has still managed to appreciate against the Pound (GBP).

This is mainly down to support from Tuesday afternoon’s manufacturing production reading for April, which has shown a year-on-year upward shift from 4.7% to 5.2%.

Greater levels of manufacturing output have in turn contributed to a higher index of industrial production (IIP) reading, which has risen from 4.5% in March to 4.9% in April.

Commenting on the results, ICRA Principal Economist Aditi Nayar said:

‘As expected, mining and manufacturing drove the uptick in IIP growth in April.

‘The rebound in capital goods to a double-digit growth was driven by a favourable base and the performance of commercial vehicles.’

 

Pound Sterling to Indian Rupee Exchange Rate Forecast: Will GBP/INR Rise on Retail Sales Growth?

The week’s turbulent Pound to Indian Rupee (GBP/INR) exchange rate movement could continue on Thursday, when UK retail sales figures for May will be released.

These readings are predicted to show significant year-on-year growth in sales activity, but a converse slowdown in month-on-month sales levels.

Annual figures are usually the more high-impact of the two, so the Pound could still appreciate against the Indian Rupee on Thursday morning.

 

Are INR/GBP Exchange Rate Losses ahead on Forecast-Matching Fed Interest Rate Hike?

On the other side of the pairing, the Indian Rupee (INR) is at risk of devaluation against Pound Sterling (GBP) as a Federal Reserve interest rate decision is revealed this evening.

Policymakers at the US central bank will be meeting to discuss any adjustment to interest rates this month; the overwhelming expectation is for a rate hike from 1.75% to 2%.

This might trigger a US Dollar rally, which in turn could weaken the Indian Rupee and lead to a GBP/INR exchange rate rise.

The Rupee can be strongly influenced by risk sentiment – if demand for the ‘safer’ US Dollar rises, comparatively less stable currencies in emerging economies like the INR can fall in value.

Adam Solomon

Adam joined the team at TorFX soon after graduating from University in 2005 with a degree in Journalism. Since then Adam has advanced to become both Head of Trading and Head of Treasury. His keen interest in the currency market and knowledge of what drives exchange rates makes him perfectly positioned to produce regular market updates focused on the movements of the major currencies.

Contact Adam Solomon


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