The Pound Sterling to Indian Rupee (GBP/INR) exchange rate rallied by around 0.76% on Tuesday morning.
In response to mostly positive domestic data, the Pound strengthened versus many of its closest currency competitors. Of particular significance was a spike in April’s Mortgage Approvals and better-than-expected construction output in May.
The Indian Rupee, meanwhile, dived across the board after the Reserve Bank of India (RBI) cut the benchmark interest rate. Although the move was expected, many speculate that this will not be the last cut in a prolonged easing cycle.
The Pound Sterling to Indian Rupee (GBP/INR) exchange rate is currently trending in the region of 97.3620.
Pound Sterling (GBP) Exchange Rate Advances against the Rupee on Positive Data Results
British data produced mostly positive results on Tuesday, which caused the UK asset to recover losses racked up on Monday from below-forecast manufacturing output. One such positive data result was the Markit Construction PMI, which bettered the median market forecast of a rise from 54.2 to 55.0 with May’s actual result showing construction output growing to 55.9.
Commenting on the report, David Noble, Group Chief Executive Officer at the Chartered Institute of Procurement & Supply, said; ‘The brakes are now off for the construction sector as it makes up some of the losses over the last few months with a steady and comfortable improvement. Though nothing like the highs of 2014, the quietly confident approach after the restraint displayed before the General Election, shows business confidence at its highest since February 2006.’
The Pound Sterling to Indian Rupee (GBP/INR) exchange rate dropped to a low of 96.6160 today.
Indian Rupee (INR) Exchange Rate Forecast to Soften versus the Pound on RBI Policy Easing
The RBI cut the repo rate by 25 basis points to 7.25% on Tuesday. This was forecast by most economists, but the policy easement still caused a Rupee declination. RBI Governor Raghuram Rajan stated that policy decisions would continue to be driven by domestic data results, and that more easing is possible to combat inflationary pressures.
‘Today’s decision by the Reserve Bank of India (RBI) to cut the repo rate for the third time this year is unlikely to be the last in the current loosening cycle,’ Shilan Shah, India economist at Capital Economics, wrote in a note following the decision. ‘But the RBI can’t be complacent about meeting its medium-term inflation target. Given this, we are forecasting only one more 25bp cut in this cycle, which would bring the repo rate to 7.00%,’ he added.
Pound Sterling to Indian Rupee (GBP/INR) Exchange Rate Forecast to Hold Gains on Rising Crude Prices
With an absence of further domestic data publications to drive changes, the Pound Sterling to Indian Rupee (GBP/INR) exchange rate is likely to hold gains for the remainder of Tuesday’s European session. In addition, rising crude prices are likely to weigh on demand for the Indian asset.
Wednesday is likely to see significant GBP/INR volatility with economic data publications due for both the UK and India. Of particular significance will be the British Services PMI given that the services sector makes up the majority of UK Gross Domestic Product.
The Pound Sterling to Indian Rupee (GBP/INR) exchange rate climbed to a high of 97.4010 today.
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