Pound to Indian Rupee (GBP/INR) Exchange Rate Slackens, USD to INR Higher before Retail Sales Data

As the local session closed on Monday the Rupee was 0.10 per cent stronger against the Pound and achieved a high of 58.9700 against the US Dollar.

With currency market volatility at low levels and investor appetite for higher-risk assets buoyed by last week’s European Central Bank rate announcement, the Rupee has strengthened against the Pound in spite of some positive UK news and is holding steady against the US Dollar.

The Rupee is a currency with a reputation for fluctuating suddenly and extremely, but since the Indian populace elected a new government (one which is expected to support the nation’s economic recovery) the Rupee has enjoyed a comparatively stable relationship with its major rivals.

Some industry experts have also argued that the extensive Rupee volatility witnessed over the past 18-months could be at an end, for the time being at least. In the opinion of Yashpal Gupta; ‘If the current momentum continues, the Rupee may touch 50-55 in the short term However, given the negative impact that a strong Rupee has on exports and the likelihood of the government lifting the ban on gold imports, the Rupee should stabilise at 60 per Dollar in the long run.’

As US data is lacking today the USD to INR exchange rate may trade in a narrow range. However, investors will already be looking ahead to the week’s biggest US news – advance retail sales figures.

The sales data is expected to show a 0.6 per cent increase in May, following a 0.1 per cent advance in April.

There is little in the way of influential Indian data until Thursday, when the nation’s industrial/manufacturing production reports and inflation rate figures will be released. This is followed on Friday by Indian foreign reserves, deposit growth and bank loan growth data.

Of course, movement in the GBP to INR pairing will occur before then as investors respond to several important UK reports. If the British industrial/manufacturing production and employment figures show the improvement expected by economists the Pound could recoup losses against the Rupee.

It has been forecast that UK manufacturing production increased by 0.4 per cent in April, month-on-month, while industrial production also rallied by 0.4 per cent.

The UK’s employment report may show that the UK economy added 270,000 positions in the three-months to April – pushing the nation’s unemployment rate down to 6.7 per cent and adding to the case for a rate increase from the Bank of England. This result could potentially cause widespread Pound gains.