Pound to Indian Rupee (GBP/INR) Exchange Rate Forecast – Pound Pushes Rupee Back, USD/INR Fluctuating

Yesterday the Rupee held the Pound at bay as the British currency was weakened by a surprising dip in UK house prices.

However, during European trading Sterling was supercharged by a surge in UK retail sales and the Rupee gave up gains.

The UK sales report shocked investors by showing a year-on-year jump of 6.1 per cent in December and a month-on-month advance of 2.8.

Economists had envisaged a monthly gain of just 0.3 per cent and a yearly climb of 3.2 per cent.

Sales including autos also came in well above forecasts, advancing 2.6 per cent on the month and 5.3 per cent on the year.

Given that recent UK reports have fallen shy of estimates, this buoyant result has given the nation’s economic outlook (and its currency) a boost.

According to Kate Davis from the Office for National Statistics; ‘This December was much better than what we’ve seen in previous years. It’s the small stores that are very much driving growth – they are seeing a consistent gain of 8% annual growth, while large stores are seeing 2.6% growth.’

However, while this report is encouraging some economists are urging investors to rein in their optimism as sales could fall in the post-Christmas period.

IHS Global Insight’s Howard Archer stated; ‘It’s very possible that consumers could take a breather after finally splashing out for Christmas and in the sales, given that inflation is still running at double the rate of earnings growth.’

The GBP/INR pairing moved away from a low of 99.9925 to hit a high of 101.2190 before the release of Indian foreign reserves figures.

Foreign reserves advanced from 293.11 billion Dollars to 293.29 billion Dollars in the week ending January 10th.

The Pound continued trading higher against the Rupee after the data was published.

Meanwhile, the Rupee hit a five-week high against the US Dollar as the ‘Greenback’ fluctuated during North American trading as restrained inflation figures gave the Fed more scope to keep interest rates at record lows for longer.

If today’s US industrial/manufacturing reports, building permits/housing starts figures and University of Michigan Confidence gauge add to the case for the Federal Reserve tapering stimulus the Rupee could lose ground against the US Dollar before the weekend.