Pound to Rupee Trims Gain after UK Sales Surge, INR/USD Edges away from 8-month high

On Thursday the Rupee continued trading close to an 8-month high against the US Dollar but pared recent gains against the Pound as investors digested some upbeat UK news.

During the European session the Pound was modestly boosted against peers like the Rupee as data showed that UK retail sales surged in February.

Sales excluding auto were up 1.8 per cent in February, month-on-month, following a negatively revised monthly decline of 2.0 per cent in January.

Economists had been expecting a monthly sales climb of just 0.3 per cent.

On the year UK sales were up 4.2 per cent, down from 4.4 per cent the previous month but beating the annual increase of 2.9 per cent projected by economists.

The surprisingly strong increase was largely the result of increased spending on food.

The Pound to Rupee (GBP/INR) exchange rate is currently 100.0080 while the Rupee to US Dollar (INR/USD) rate is around 0.0166.

Sterling posted gains against the Euro and US Dollar as European trading continued.

Meanwhile, after rallying to an eight-month high against the US Dollar, the Rupee’s upward momentum was halted as the Reserve Bank of India intervened in the currency market on Wednesday and purchased around 1 billion US Dollars to be swapped in forwards markets.

In the opinion of forex trader Paresh Nayar; ‘The sentiment is in favour of the Rupee. Now 60 is a very crucial psychological level, which if breached, may trigger stop losses and there will be fresh views in favour of the Rupee’.

One of the main reasons for the Rupee’s recent bullish attitude is the expectation that the opposition Bharatiya Janata Party will win the upcoming Indian election and help India’s economic recovery gather steam.

The leader of the Hindu nationalist BJP recently asserted that he expects the party to achieve a landslide victory as a result of India’s eagerness for the instatement of wide-ranging economic reforms.

During an interview BJP President Rajnath Singh asserted that the party’s ‘momentum of support is increasing day by day due to the failure of the Congress-led government on every front and the tremendous popularity of Narendra Modi.’ [The BJP’s prime ministerial candidate.]

Before the weekend additional Pound to Rupee (GBP/INR) movement could occur as a result of tomorrow’s Indian foreign reserves figures and the publication of final fourth quarter UK growth data.