GBP/INR Exchange Rate Slumps as Lacklustre UK Inflation Dampens BoE Rate Hike Expectations
The Pound to Indian Rupee (GBP/INR) exchange rate stuck a new one-month low this morning, following an unexpectedly weak inflation reading from the UK.
At the time of writing GBP/INR is down by around 0.2%, leaving the pairing at its lowest levels since the start of June.
Pound Exchange Rate (GBP) Plummets as Inflation Misses
After struggling through the first half of the week in the face of growing political turmoil in the UK, the Pound (GBP) was expected to find some much needed relief today from the latest Consumer Price Index (CPI) figures.
This proved not to be the case however as a lower-than-expected CPI print sent Sterling reeling once again.
According to data published by the Office for National Statistics (ONS) UK inflation held at a one-year low of 2.4% in June, falling short of expectations that it would jump to 2.6%.
The ONS attributed the disappointing result on a sizable fall in prices for clothing and video games, which offset rises in fuel and energy costs.
June’s reading is particularly damaging to the GBP exchange rate as it now puts an expected rate hike from the Bank of England (BoE) next month into question.
With both wage growth and inflation coming below-target and the political situation in Westminster continuing to deteriorate, analysts are beginning to suggest the BoE will hold off on raising rates again next month.
Indian Rupee Exchange Rate (INR) Advances despite Trade Fears
Meanwhile the Indian Rupee (INR) exchange rate remains in a position of relative strength, with INR appearing resistant to some of the losses seen in its Asian neighbours on the back of rising trade tensions between the US and China
Analysts suggest this is thanks to India’s comparative lack of exposure to international trade, shielding the country’s growth from any potential fallout from a trade war between the US and China.
Khoon Goh, head of Asia research at Australia and New Zealand Banking Group, said:
‘The Indian rupee will not be much impacted as India’s exports to GDP share is very low and India is not as exposed to global supply chains as other Asian countries.’
GBP/INR Exchange Rate Forecast: Will Surprise Lift in UK Retail Sales Bolster Sterling?
Looking ahead to the remainder of this week’s session, the Pound Indian Rupee (GBP/INR) exchange rate may tick higher with the release of the UK’s latest Retail Sales data.
While economists currently forecast sales growth will have slowed in June, a run of good weather and the start of the World Cup is expected to have spurred consumer spending last month, potentially leading to faster-than-expected sales growth and driving some gains in Sterling (GBP).
However, a cloud of political uncertainty is hanging over the UK so any gains in the GBP exchange rate could be limited.
Meanwhile, with risk appetite retreating, markets may begin to sour on the Indian Rupee (INR), especially in the face of limited domestic data to drive the currency higher.