The Pound Sterling to Indian Rupee (GBP/INR) exchange rate advanced by around 0.27% on Wednesday morning.
Although British Services data eclipsed expectations, the Pound is generally trending lower versus most of its major peers. The depreciation can be linked to disappointing shop price data, in addition to ongoing political uncertainty hampering investor confidence.
The Indian Rupee, meanwhile, softened versus many of its major peers despite reasonably positive domestic data. The downtrend can be linked to higher oil prices and speculation that the Reserve Bank of India (RBI) will cut rates during the next policy meeting.
The Pound Sterling to Indian Rupee (GBP/INR) exchange rate is currently trending in the region of 96.4280.
Pound Sterling (GBP) Exchange Rate Edges Lower despite Positive Services PMI
With the general election only a day away, significantly dampened trader confidence has seen the Pound soften versus many of its most traded currency competitors. With the potential for a dramatic shift in policy, the Pound is unlikely to sustain any notable gains until the conclusion of the election.
Aiding the Sterling downtrend was disappointing shop price data. The BRC Shop Price Index was forecast to decline by -1.7%, but the actual result cooled by -1.9% in April. Helen Dickinson, director general at the BRC, said: ‘The falling prices of non-food goods slowed down very slightly, whilst offering up great deals on clothing, electricals, books, stationery, home entertainment, DIY, gardening and hardware. April saw the 24th consecutive month of falling shop prices and the 25th consecutive month of falling non-food prices. These trends help to illustrate how retail has helped the consumer keep the cost of living down in recent years.’
The UK Services PMI, which accounts for a healthy portion of British Gross Domestic Product, advanced to 59.5 in April, bettering the median market forecast figure of 58.5. Chris Williamson, Chief Economist at Markit, said; ‘Fears of the economy slumping amid election jitters are allayed as an upturn in service sector activity has helped offset sharp slowdowns in both manufacturing and construction.’
The Pound Sterling to Indian Rupee (GBP/INR) exchange rate has fallen to a low of 96.4170 today.
Indian Rupee (INR) Exchange Rate Softens on Oil Prices
As one of the world’s foremost crude importers, the recent oil price rally has seen dampened demand for the Indian asset. With crude showing little sign of resuming bearishness, the Rupee is likely to struggle to sustain any significant gains. Aiding the downtrend was slightly weaker services growth.
Markit economist Pollyanna De Lima said; ‘The slowdown in the Indian service sector continued in April, with weaker activity growth reflecting softer demand conditions. Accompanying the subdued outlook in the opening month of the fiscal year, was a return to job shedding as companies maintained a cost-cautious approach. On the positive side, panellists’ confidence regarding the one-year outlook for activity improved, indicating that firms are optimistic the current deceleration in growth is a temporary soft patch.’
The Rupee also declined in response to speculation that the RBI will cut rates in June as a result of cool food prices. ‘The recent softening in food prices could continue into 2015 and forms the basis for our June rate cut call,’ HSBC said in a note.
Pound Sterling to Indian Rupee (GBP/INR) Exchange Rate Forecast to Hold Gains
Although the Pound has seen increased volatility amid election jitters, the potential for RBI stimulus and higher oil prices should see the Pound Sterling to Indian Rupee (GBP/INR) exchange rate hold gains for the remainder of Wednesday’s European session.
Thursday ought to see the Pound soften versus most of its major peers as the general election comes to a close. With the results due early on Friday morning, the potential for a Sterling rally is extremely unlikely.
The Pound Sterling to Indian Rupee (GBP/INR) exchange rate climbed to a high of 96.8810 today.
