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Pound to Indian Rupee Exchange Rate Firms on BoE Minutes

May 20, 2015 - Written by Tim Boyer

Pound to Indian Rupee Exchange Rate Firms on BoE Minutes

The Pound Sterling to Indian Rupee exchange rate firmed after Bank of England (BoE) policy meeting minutes showed that two members of the bank’s monetary policy committee thought about voting in favour of raising interest rates and that policy makers believe that the UK economic growth will accelerate in the current quarter.

The BoE minutes showed that the monetary policy committee voted unanimously to leave interest rates unchanged at the record low level of 0.5%. The minutes did say however, that two members of the committee were ‘finely balanced between voting to hold or raise rates’.

"While there was a range of views over the most likely future path for Bank Rate, all members agreed that it was more likely than not that Bank Rate would rise over the three-year forecast period," the minutes said.

The two members are likely to have been Ian McCafferty and Maritn Weale as both men have previously been in favour of hiking rates.

‘UK GDP growth had slowed further in the first estimate for 2015 Q1, but survey indicators continued to suggest that the pace of growth was faster than that, and it was more likely than not that the Q1 data would be revised upwards in future releases. The Committee judged that GDP growth would pick up in Q2 to close to its historical average rate,’ said the BoE minutes.

After the minutes were released, the Pound Sterling managed to rally against the majority of its most traded peers.

The Indian Rupee meanwhile followed other emerging market currencies lower as a strengthening US Dollar put pressure upon them. The ‘Greenback’ held onto gains after strengthening in the previous session because of stronger than expected US housing data. The report released by the Washington based Commerce Department showed that the number of building permits issued in April soared by 10.1% to 1.143 million. The data also showed that housing starts surged by 20.2% in April, the rise smashed forecasts for a rise of 9.9%. The US Dollar could make further gains if the upcoming Federal Reserve policy statement is hawkish.

Also weighing on the Indian Rupee was a rise in oil prices. As a major importer of the commodity, a price rise impacts upon the nation’s trade balance. Crude oil prices rebounded following losses as data out of the US showed that oil stocks fell more than expected last week. Strong data out of Japan also sent prices rising as it increased expectations for an increase in demand from the Asian nation.

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