The Pound Sterling to Indian Rupee (GBP/INR) exchange rate softened by around -0.18% on Thursday morning.
In the initial aftermath of the surprise rate cut by the Reserve Bank of India (RBI), the Rupee slumped across the board. However, after the news was digested the Rupee strengthened as analysts feel that the cut was timely and will have a positive effect.
The Pound, meanwhile, fluctuated versus its major peers ahead of the Bank of England (BoE) rate decision. Although most don’t expect any changes to the cash rate, there is a slight possibility that quantitative easing will be reduced. With the forthcoming general election weighing on policymaker decisions, however, any significant changes are very unlikely.
The Pound Sterling to Indian Rupee (GBP/INR) exchange rate is currently trending in the region of 94.8540.
Pound Sterling (GBP) Exchange Rate Fluctuates ahead of BoE Rate Decision
As mentioned above, the Pound fluctuated versus its major peers as traders await the BoE rate decision and Asset Purchase Target. A slight declination can be attributed to cooling house prices and the forthcoming general election amplifying political uncertainties.
‘They’re in no rush to raise rates with inflation so far below target,’ said Daniel Vernazza, an economist at UniCredit SpA in London. ‘Once a government is formed, the uncertainty from the election won’t be an issue, and strong wage growth will support a rate increase. Our forecast is for the first move to come in August.’
February’s Halifax House Prices came in at 8.3% growth on the year, slightly below the median market forecast 8.5%. Month-on-month house prices softened by -0.3% which is below the market consensus of a declination by -0.2%.
The Pound Sterling to Indian Rupee (GBP/INR) exchange rate has fallen to a low of 94.6650 today.
Indian Rupee (INR) Exchange Rate Strengthens despite Rising Crude Prices
Although crude prices rose on Thursday, which means India’s imports will be more expensive, the Rupee strengthened versus most of its major rivals. This can be attributed to a recovery from the reactive downtrend seen after the RBI surprised investors by cutting its benchmark interest rate.
‘It looks like the RBI wants monetary policy transmission and by cutting rates offcycle they are trying to push transmission proactively. The combination of lower inflationary pressures, fiscal consolidation roadmap, rationalisation of expenditure has prompted RBI to cut rates in an offcycle move,’ said Saugata Bhattacharya, chief economist, Axis bank, Mumbai.
Frederic Neumann, co-head of Asian economics at HSBC in Singapore, said; ‘Exciting morning! It looks like the RBI feels reassured by the budget proposals. The budget is going in the right direction with greater spending on infrastructure, something that the RBI has sought.’
Pound Sterling to Indian Rupee (GBP/INR) Exchange Rate Forecast to Fluctuate
With opinion divided about how the BoE Monetary Policy Committee will react to the recent run of positive data results, the Pound Sterling to Indian Rupee (GBP/INR) exchange rate is likely to fluctuate. Additional volatility will come from the RBI Current Account data, due for publication later on Thursday morning.
Friday will see heightened GBP/INR volatility with the British Consumer Inflation Expectations and several Indian data publications due.
The Pound Sterling to Indian Rupee (GBP/INR) exchange rate has reached a high today of 95.1160.
