GBP to Rupee Exchange Rate Higher, INR Forecast Further Gains

July 2, 2014 - Written by Admin

STORY LINK GBP to Rupee Exchange Rate Higher, INR Forecast Further Gains

The Pound Sterling to Rupee (GBP/INR) exchange rate softened on Wednesday despite the release of a better-than-expected Construction PMI report.

Early in the session the Pound found support from news that UK house prices advanced above a 2007 peak after rising by 1% last month and were 11.8% higher than the same time as the previous year.

The Pound to Rupee currently converts as 1 GBP = 102.4125 INR as of Thursday 3rd July 2014.

According to Nationwide the average price of a UK property was around £188,903 but in London prices went beyond the £400,000 mark. Despite the strong rise in prices the group is expecting price gains to slow from July as new measures introduced to curb debt and unsustainable lending were introduced by the Bank of England.

"There are already signs that buyers are starting to say enough is enough. Whereas a few months ago, buyers were offering silly prices on some very average properties, the silly season in the capital seems to have passed. Buyers are now taking their time, and making fair offers. We are definitely seeing fewer properties going for or over asking price," said James Hall, director of London estate agents Fishneedwater

Last month BoE governor Mark Carney said that the UK property market was the biggest threat to the UK’s economic recovery.

British Pound Strengthens vs Euro, Dollar and Australian Dollar Rates

The Pound then firmed against the majority of its major peers after the latest Markit compiled construction purchasing managers index came in better-than-forecast. The construction PMI climbed to 62.6 in June, higher than May’s figure of 60.0 and beat expectations for a decline to 59.5.

The data also showed that construction firms recorded that they are hiring staff at the fastest pace since 1197, when the survey first began. The upbeat data added to yesterday’s strong manufacturing data and raised speculation that the Bank of England could raise interest rates before the end of the year.

In the afternoon the Indian Rupee rallied by its biggest level in six weeks as optimism that next week’s federal budget will include a number of measures designed to boost the nation’s economy.

According to Barclay’s Plc, Prime Minister Narendra Modi’s first budget since winning office will outline plans to revive economic growth which has been struggling near its lowest level in a decade. As a result of the increased optimism foreign investors purchased $37.8 million more Indian shares sending 2014’2 inflows to $9.9 billion.

“The budget is likely to deliver meaningful policies that support the Rupee and further foreign portfolio inflows. We expect a credible roadmap toward medium-term fiscal consolidation to be announced, important for continued bond purchases by foreign investors and the Ruppee support,” said a Singapore based currency strategist at Barclays.

Rupee Exchange Rate Forecast

Further gains for the Rupee are likely ahead of the July 10th budget.

"Now that the psychological level of 60 has been breached and with a close of below 59.70, there could be potential further gains for the rupee. But RBI can step in to buy at any point, "The budget is going to be the most keenly watched budget after many years. The forex market will be impacted based on the outlook for inflows in various sectors based on specific measures taken,” said Paresh Nayar, the head of foreign exchange at First Rand Bank.

The Pound could recover some ground on Thursday if the latest UK Services PMI report comes in stronger and adds to the optimism over the UK economy’s outlook.

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