Pound to Rupee Exchange Rate Today - GBP INR Softer Against Rallying Indian Currency

July 30, 2014 - Written by Frank Davies

STORY LINK Pound to Rupee Exchange Rate Today - GBP INR Softer Against Rallying Indian Currency

Currency News UK: The Pound to Rupee exchange rate (GBP/INR) softened against a rallying Indian Rupee on Wednesday in a day packed with major data releases.

Alas the UK was not one of the places where data could be found and as such the Pound was seeing mixed trade against most of its major peers. The currency could make gains against the Euro later in the session if the latest inflation figures out of Germany disappoint the markets.

Early in Wednesday’s session the Indian Rupee was broadly weaker against it most commonly traded peers including the Pound as it came under pressure from end of month demand for US Dollars by the nation’s importers.

As the session progressed the Rupee managed to stage a comeback from its earlier declines as fund inflows into domestic assets countered the demand for US Dollars. Global funds introduced $5.7 billion into India’s stocks and bonds as the government prepares to unveil its plans to cut the country’s budget deficit and allow more foreign investors to support industry in India.

The Rupee advanced to its best level since July 23 against the US Dollar.

“The inflow of foreign funds has led to some positive movement in the currency. On the other hand, US Dollar demand from state-run banks on behalf of oil importers, along with the Greenback’s strength, is capping gains,” said a Mumbai based currency analyst.

Also aiding the Rupee is the improvement in the amount of Monsoon rainfall. Initially the markets were concerned that there would be a shortfall in the amount of rain needed for farmers and their crops which raised concerns that inflation could rise as the cost of food stuffs rose.

The Pound was softer against a number of peers on Wednesday after the International Monetary Fund said in a report yesterday that the Pound is overvalued by 10% to 15%.

Some economists are also forecasting that the UK currency could fall by around 4% before the end of this year.

Comments made by Bank of England Governor Mark Carney last week are also continuing to put pressure upon the Pound as he tempered expectations for an interest rate rise occurring before the end of the year. In a speech in Glasgow, Carney said that any increases will be gradual and limited and said extraordinary forces are still confronting the economy.

“The Pound has come a long way and it appears to be topping out. Long Pound-Dollar positions have gone from being a contrarian view in the summer of last year to being pretty much a consensus. A lot of good news about the UK is already in the price,” said Bill O’Neil, the London based UK chief investment officer at UBS.

The Euro meanwhile remains under heavy selling pressure over concerns by the divergence between the European Central Banks monetary policy and its major peers. Data on Wednesday showed that Spain’s economy grew by a stronger than forecast 0.6% in the second quarter of 2014, and expanded 1.2% on a year-over-year basis.

But a separate report showed that consumer inflation in Spain fell 0.6% in July, underling concerns over the threat of deflationary pressures in the Euro area.

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