Pound Sterling Rupee Exchange Rate News: GBP/INR Steady despite Indian Rupee Falling to Historic Low

GBP/INR Exchange Rate Stable Following UK Services PMI Release

The Pound Indian Rupee (GBP/INR) exchange rate is trading in a narrow range this morning as markets react to the UK’s latest services PMI.

At the time of writing GBP/INR is virtually unchanged on the day, leaving the pairing close to the two-year high struck earlier this month.

Pound Exchange Rate (GBP) Buoyed by Robust Services PMI

The Pound (GBP) appears to have found some solid footing this morning as markets welcome the release of the UK’s latest services PMI.

While data published by IHS Markit revealed growth in the UK’s service sector had slowed slightly last month, with the index slipping from 54.3 to 53.9, it was still seen as a solid result for Britain’s all-important service sector, with markets also welcoming suggestions that the robust expansion of the UK’s private sector in the last three months points to another healthy quarter in terms of GDP.

Chris Williamson, Chief Business Economist at IHS Markit said:

‘The service sector continued to report solid steady business growth in September which, alongside news of sustained expansions in both manufacturing and construction, suggests the UK economy expanded by just under 0.4% in the third quarter.

‘The data therefore add to signs that the economy has enjoyed robust growth since the rocky start to the year, when extreme weather disrupted business.’

Indian Rupee Exchange Rate (INR) Sinks to Record Lows

Meanwhile sentiment in Indian Rupee (INR) appears weak this morning as the currency continues to trade at record lows against the US Dollar (USD).

The Rupee has come under considerable selling pressure over the past month, with the emerging market currency having now fallen over 14% against the ‘Greenback’ since the start of the year.

The recent depreciation in INR has been partly attributed to India’s growing current account deficit, which has coincided with a broad sell-off in emerging markets, with the losses being accentuated by the US Dollar’s rally over the summer.

GBP/INR Exchange Rate Forecast: RBI Rate Decision in Focus, Can it Save the Rupee?

Looking ahead, the main catalyst for movement in the Pound Indian Rupee (GBP/INR) exchange rate in the second half of this week’s session is expected the be the Reserve Bank of India’s (RBI) rate decision on Friday.

Current market expectations see the RBI voting to bump interest rates up from 6.5% to 6.75% following its next policy meeting.

While a rate hike may help to give the Rupee a short-term boost, economists suggests that a hike of 0.25% is unlikely to be enough for the Rupee to reverse its fortunes.

Prakash Sakpal, vice president of research at ING explains:

‘Even if it hikes by 25 [basis points] as expected that’s unlikely to help the currency … the RBI will have to do more, though that looks unlikely on the grounds of on-target inflation and stress in the financial sector.’

Meanwhile a lull in UK economic data in the second half of the week could see movement in the Pound driven by political developments in the UK, with Theresa May’s keynote speech at the Conservative party conference likely to be of particular focus for GBP investors, especially if the PM hints at possible revisions to her Chequers deal.

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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