Pound to Rupee Exchange Rate - Today's GBP INR Rate Softer Amid Global Uncertainty

September 24, 2014 - Written by Tim Boyer

STORY LINK Pound to Rupee Exchange Rate - Today's GBP INR Rate Softer Amid Global Uncertainty

The UK Pound to Rupee exchange rate (GBP/INR) trended lower in the mid-week session as the market faces uncertainty in the face of global conflict.

The Pound is likely to remain volatile whilst UK Prime Minister David Cameron faces tough decisions regarding the nation’s involvement in Syria. On the other hand, the Rupee may soon start to feel the effects of the revocation of 214 coal mining permits as India’s Supreme Court ruled against their unfairness.

Indian Rupee May Feel Effect of Supreme Court Ruling

The Indian Rupee may fluctuate as 214 out of 218 permits were voided after the court decided that licences given to companies for their own use were invalid. Inevitably this will cause major losses to massive companies with coal supplies which come from their own mining facilities. The Court stated: ‘The approach had been ad-hoc and casual. There was no fair and transparent procedure, all resulting in unfair distribution of the national wealth.’ The revocation of permits is expected to risk anything in excess of $47 billion US Dollars (USD) worth of investments.

The US Dollar (USD) has rallied against majors in recent months, but the ‘Buck’ appears to have paused in its recent climb. The ‘Greenback’ has placed pressure on both the Pound and the Rupee as investor’s attention turns to the possibility of US interest rate hikes. As the end of the year draws closer, many are speculating about factors that could push the Rupee higher. Bank of America Merrill Lynch stated: ‘The RBI’s [Reserve Bank of India] range of tolerance for the USD/INR and its intention to build reserves will be the single-biggest driver of the Rupee over our forecast horizon, in our view.’

Pound Exchange Rate Static on Lack of Influential Data

The Pound is trading amid a lack of influential UK data this week, putting more impetus on tomorrow’s speech from Bank of England (BoE) Governor Mark Carney. Last week, the most significant factor affecting Sterling was the Scottish referendum, which saw Scotland decide to remain within the UK. However, now the vote has taken place, attention turns back to the previous topic of interest rate hikes. Current speculation sees the first increase in UK borrowing costs occurring in the spring. Forex expert Jameel Ahmad commented that he believed the Pound could rally ‘once it is clear what kind of independent political power Scotland will be given and investors’ have finally received a clear time frame from the BoE for a rate rise.’

Sterling has been pushed lower as the UK government attempts to decide how much support they will offer in the current Syria situation. Prime Minister David Cameron has warned that Islamist extremists wish to harm UK citizens, which has placed downward pressure on Sterling. Any developments in the situation are likely to send ripples through the market, altering exchange rates.

Thursday will see the release of UK CBI Reported Sales figures, followed by Average Weekly Earnings which could help to support the Pound if they show improvement. However, it’s expected that Sterling will trade statically in anticipation of Carney’s speech. Carney’s remarks could bolster the UK currency if the BoE chief takes a hawkish tone. Friday will close the week with the UK Hometrack Housing Survey which will give an overview of the housing market. Meanwhile, Friday will see the publication of Indian Foreign Reserves figures which may also alter the GBP to INR exchange rate.

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