Pound to Rupee Exchange Rate Outlook - GBP to INR Climbs, Rupee Lower vs Euro (EUR) & US Dollar (USD)

September 10, 2014 - Written by Frank Davies

STORY LINK Pound to Rupee Exchange Rate Outlook - GBP to INR Climbs, Rupee Lower vs Euro (EUR) & US Dollar (USD)

The British Pound to Indian Rupee (GBP/INR) exchange rate has trended higher over the course of this week, as Sterling continued to make gains against the majors.

The Pound conversion rate has clawed back some of the ground it’s lost in recent weeks following poor domestic data and doubt surrounding the Scottish Referendum. Governor of the Bank of England, Mark Carney, stated yesterday that he predicts an interest rate hike will occur in spring, whilst also voicing that a currency union with an independent Scotland would be impossible. The Rupee however has tumbled against other majors in its biggest decline in over a month.

Rupee Strength Hindered by the US Dollar (USD)

The Rupee has fallen along with majors including the Pound, as the US Dollar strengthens on the prospect of Federal Reserve rate hikes occuring in the near future. Mumbai based analyst Anindya Banaerjee commented: ‘We are seeing a spill-over effect of the Dollar’s strength globally. That said, we expect the Rupee to find support from foreign inflows into Indian assets, which should continue as other central banks around the world offer monetary stimulus.’

Friday will be a big day for the Rupee due to the release of Indian Foreign Reserves, Industrial Production, Inflation Rate and Manufacturing Production figures. The close of September will also herald the announcement of the Reserve Bank of India’s policy review which may support the Indian currency. India’s latest monsoon floods which have devastated the country and claimed 400 lives, are likely to have an effect on the Rupee.

Pound Exchange Rate Gains from Carney’s Statements in Liverpool

Meanwhile, in the UK, Governor Carney addressed issues such as wages, interest rates, and the prospect of Scotland leaving the UK in the upcoming Scottish Referendum in Tuesday’s speech in Liverpool. In the lead-up to the Scottish vote the Pound has felt downward pressure as speculation regarding the outcome circulates. With some industry experts stating that Sterling could lose up to 15% of its value if Scotland leaves the UK, investors have been shy of the Pound of late.

Carney has also stated in recent weeks that the Bank of England has been constructing contingency plans to prepare for the eventuality of Scotland leaving the UK—without specifying what these measures may be. Yesterday however saw Carney state clearly that—regardless of all the recent debate and arguments surrounding Scotland keeping the Pound—it wouldn’t be possible as it will be ‘incompatible with sovereignty.’

Carney used the Euro as an example, suggesting that many countries have attempted to use the Euro unsuccessfully, failing under the same problems that Scotland would encounter if it tried to utilise Sterling. Carney commented: ‘You need tax, revenues and spending flowing across those borders to help equalise, to an extent, some of the inevitable differences.’

Carney and other members of the Bank of England are due to deliver a testimony today regarding the latest August Inflation Report which could offer further support for the Pound, if the Bank of England’s outlook adopts a positive outlook. Indian Rupee movement will be restrained before Friday’s domestic data; in the mean time however, the GBP to INR exchange rate will be reliant on any fluctuations in Sterling.

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TAGS: Currency Predictions Daily Currency Updates Indi Forecasts