Pound Sterling Forecast: GBP to Euro and Rupee Exchange Rate Outlook

February 9, 2015 - Written by John Cameron

STORY LINK Pound Sterling Forecast: GBP to Euro and Rupee Exchange Rate Outlook

The Indian Rupee (currency:INR) has suffered some selling pressure during early trading this week, sending the GBP INR exchange rate up to an intraday high of 94.9240 during this morning’s European session in the currency markets.

The Rupee has enjoyed a strong run since reforming Prime Minister Narendra Modi won last year’s general election on a mandate to revolutionise the way the giant subcontinental economy does business. However, last night’s news that most exit polls taken straight after voting closed after local elections in Delhi predicted that Modi’s Bharatiya Janata Party did not fare well and are unlikely to win the day. Modi may have go-ahead ideas regarding India’s future, but without the political clout to action these proposals, nothing will get done.

The Rupee incurred further selling pressure thanks to last Friday’s strong US job creation figures. The closely-monitored Non-Farm Payrolls data pointed to yet another month with over 200,000 new jobs generated. The implication of this strongprint, as far as market participants are concerned, is that the Federal Reserve may look to increase interest rates in the middle part of this year. Such a move would represent a real test for risk-driven emerging market currencies including the Rupee.

Elsewhere, support for the euro (currency:EUR) has remained flaky on the day following comments from new Greek Prime Minister Alexis Tsipras last night stating that his debt-addled nation would not be seeking any further bailout funding from Brussels and would instead be looking for a bridging loan to cover its near-term financial shortfall. In a comment which is likely to infuriate Berlin’s leaders, Tsipras went on to issue a reminder that his nation is still awaiting payment of its World War II reparations from Germany.

The situation is likely to come to a head on 18th February when the European Central Bank will be left with no option but to pull the plug on its emergency line of credit to Athens, effectively ensuring that Greece will be the first member state top exit the eurozone. Analysts forecast that this step into the unknown will see the Pound Sterling euro exchange rate sharply higher.

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