The Pound Sterling to Indian Rupee (GBP/INR) exchange rate maintained gains despite a drop in UK Manufacturing Production figures.
The manufacturing sector slipped in October for the first time since May. Industry expert Joakim Tiberg suggests that the ecostat is ‘supporting the notion that the UK might become more sensitive to the Eurozone potential weakness.’
Tiberg continues: ‘With the pull on Eurozone yields lower, the UK seems to be following. For the short term, yields can remain potentially suppressed’ before a rise in 2015.
The fall in figures doesn’t bode well for the government in the run up to next year’s general election. During the run-up to the election political parties will be vying for votes, causing uncertainty for the Pound Sterling exchange rate.
Earlier in the The Pound Sterling to Indian Rupee (GBP/INR) exchange rate advanced after favourable British Retail Consortium (BRC) figures showed a boost in Like-For-Like sales in November.
The report showed an increase of 0.9% in November on the year after October’s 0.0% and the forecast 0.6%. If annual UK Industrial Production and Manufacturing Production ecostats also improve as economists’ have predicted, the Pound Sterling could rally against other majors.
BRC Spokeswoman Helen Dickinson commented: ‘November’s retail sales demonstrate continued growth in sales across the board compared to last month. The huge demand for bargain TV’s and other household appliances on Black Friday whether for personal use or as presents meant that electricals were the stand out category in terms of sales growth.’
Indian Banks to Slash Base Rates? Indian Rupee (INR) Exchange Rate Dampened
The Pound Sterling to Indian Rupee (GBP/INR) exchange rate extended its gains in Monday’s European trading as Reserve Bank of India (RBI) rate cuts remain a very real prospect.
Indian banks will be lowering their base rates, after already slashing deposit rates in recent weeks.
State Bank of India Chairman Arundhati Bhattacharya commented: ‘Base rate of banks may go down faster than expected and it could even happen before the RBI cuts like signalling rate, the repo rate, which is why all banks are readjusting their deposit rates. If credit growth picks up, then we will revise our base rate as soon as possible.’
UK Employment Confidence Up Pulling Pound Sterling (GBP) Exchange Rate Higher
Earlier in the session… The Pound Sterling to Indian Rupee (GBP/INR) exchange rate has remained in a narrow range during Monday’s session after Lloyds Employment Confidence showed a rise in UK sentiment in November.
The index climbed from 0 to 1, offering the Pound Sterling exchange rate some support.
Bank of England Stress Test Ahead – Pound Sterling (GBP) Could Fluctuate on Results
Meanwhile, the Bank of England (BoE) is preparing to introduce a stress test to determine how well the UK’s eight largest lenders would stand in the face of a fresh financial crisis. BoE Governor, Mark Carney has suggested that any changes to the UK interest rate would be slow and gradual so as not to unsettle the UK economic recovery.
However, the BoE has certainly made the stress test more interesting, instead placing banks in a hypothetical situation that would see rate hikes consistently occurring, bringing the UK interest rate up from the current 0.50% to 4.0%.
Former BoE Monetary Policy Committee (MPC) member Charles Goodhart commented: ‘You could argue that going to 4.0% is against their own policy. I think it’s actually quite courageous, and better than the ECB (European Central Bank) did, to include in the scenario a feature which in some sense is against their current policy.’
As Goodhart says, the move is a bold one; however, if UK banks manage to navigate through another financial crisis successfully with interest rates at a high level, it’s possible more credit could be given to the UK economic recovery.
The results will be released on December 16th and will show whether lenders are able to cope with a catastrophic financial crisis, similar to the 2008 great recession that was the most significant crash for 150 years.
Pound Sterling to Indian Rupee (GBP/INR) Exchange Rate Forecast
Meanwhile, the Indian Rupee will be preparing for a highly influential day on Friday with the release of Indian Manufacturing Production, Industrial Production, Inflation Rate, Bank Loan Growth, Deposit Growth and Foreign Reserves figures.
On the year Indian Manufacturing Production is expected to decrease from 2.50% to 1.89%, while Industrial Production is expected to grow from 2.50% to 3.83%.
One particularly influential factor will be Inflation Rate figures which are forecast to increase on the year from 5.52% to 5.7%. Any inflation growth won’t be received well as economists are hoping for a rate cut by the Reserve Bank of India (RBI) sooner rather than later.
The RBI has suggested any depreciation in borrowing costs will occur after inflation consistently declines. However, the RBI is under increasing pressure to take action.
Morgan Stanley commented: ‘In our base case, we expect inflation to reach the 6% level on a sustained basis by March 2015 (same as the RBI’s expectation). We therefore assume 50 basis points policy rate cuts in 2015 in our base case.’
Morgan Stanley continued: ‘We believe that the first rate cut is likely to be in February/March 2015.’
The Pound Sterling to Indian Rupee (GBP/INR) exchange rate is presently trending in the region of 6.2408. The Indian Rupee to Pound Sterling (INR/GBP) exchange rate is residing at 0.0104.
