Pound Weakened on Investor Caution in Run-up to UK CPI Release
In advance of this morning’s UK Consumer Price Index figures the GBP/INR exchange rate has slumped slightly to 101.7000, with traders hedging their bets against a poor showing and any potential deflation for the domestic economy.
Earlier…
Hawkish comments from Monetary Policy Committee (MPC) member Kristen Forbes spurred the GBP/INR exchange rate to climb to a new year-high today.
Yuan Depreciation Boosted GBP/INR Exchange Rate as Rupee Value Slid
India’s year-on-year Industrial Production and Manufacturing Production both proved to be better than anticipated last week, rising significantly on the previous figures to clock in at growth of 3.8% and 4.6% respectively. The nation’s Inflation Rate also brought good news for the Rupee (INR) as it fell to 3.78%, the lowest level at which the figure has been recorded. However, like many of its neighbours, the strength of the Rupee was undercut by a series of surprise devaluations to the Yuan (CNY) by the People’s Bank of China (PBoC). This shock to the market served to rapidly push the GBP/INR exchange rate to its highest level in a year at 102.0188.
Things picked up a little for Sterling (GBP) on Friday as UK Construction Output for June increased on the previous month, although falling rather short of forecast. However, the limited importance of the construction sector within the UK economy, accounting for just 6-7% of total GDP, meant that the boost this offered was fairly limited.
UK Interest Rate Hike Speculation Pushes up GBP/INR Exchange Rate
This morning saw a relatively short-lived surge for the Pound as Monetary Policy Committee (MPC) member Kristen Forbes published comments which suggested that an increased push for a Bank of England (BoE) interest rate rise could be on the horizon. Forbes’ opinion that too long a delay in raising the rate could be of great detriment to the UK economy offered some encouragement to investors, who began to return to the currency as hopes of a hike coming before the end of the year were raised. Lack of support for the speculation soon brought Sterling back down, however, dropping away from a fresh yearly-high of 102.2886.
With no new devaluations from China and the Yuan starting to stabilise this week the value of the Rupee has steadied today.
GBP/INR Exchange Rate Forecast: UK CPI to Drive Pairing Movement
Data from India will be fairly limited over the next week. With no particularly significant economic releases upcoming, the movement of the Rupee will predominantly continue to be shaped by outside influences. Further developments in China will be of particular note, for while Chinese officials maintain that a currency war is not their intention the markets remain sceptical.
The UK, meanwhile, stands to see a fair degree of activity, especially with tomorrow’s Consumer Price Index. A prime indicator of domestic inflation and one of the key considerations the MPC will be looking at when making their next rate decision, this could spur hawkish trading should it prove better than expectations. Any further support to the possibility of a sooner rate hike is likely to increase the appeal of the Pound and push the GBP/INR pairing up, although any evidence of deflation will surely turn trading dovish.
Current GBP, INR Exchange Rates
At time of writing the Pound Sterling to Indian Rupee (GBP/INR) exchange rate is trending around 101.9800, with the Indian Rupee to Pound Sterling (INR/GBP) pairing static at 0.0098.
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