Pound Sterling (GBP) to Indian Rupee (INR) Exchange Rate Holds Ground on Strong UK Data

September 6, 2016 - Written by David Woodsmith

STORY LINK Pound Sterling (GBP) to Indian Rupee (INR) Exchange Rate Holds Ground on Strong UK Data

The Pound to Indian Rupee (GBP/INR) exchange rate has fluctuated higher since markets opened this week, defying an otherwise solid Indian Rupee. The Rupee surged on Monday amid cheer for the Reserve Bank of India’s (RBI) new Governor, but rebounded on Tuesday allowing Sterling to easily advance.

GBP/INR has seen mixed movement in recent weeks, and despite this week’s strength has thus far failed to reach last week’s high of 89.1097. The pair has remained relatively close to the week’s opening levels of 88.5151, hitting a low of 88.3181 on Monday but trending nearer to highs around 88.80 on Tuesday.

Pound (GBP) Strengthens on Trio of Strong PMIs

The Pound has recovered considerable since late-August, as data collected throughout the month indicated that economic activity had rebounded after July’s gloomy downtick.

This cheered investors even more in the last week, as fresh August PMIs published by Markit revealed that Manufacturing and Service sectors had actually grown in August despite projections of further contractions.

With Britain’s August Composite PMI now coming in at a surprisingly solid 53.6, surging from July’s 47.5, analysts predict that Britain’s economy could be on track to grow slightly in August despite previously dire forecasts of the nation falling into recession following the Brexit vote.

However, while this news was more optimistic-than-expected for markets and caused bets of further Bank of England (BoE) stimulus to fall, investors hesitated to buy too far into the Pound as the currency neared its post-Brexit vote highs in many pairs.

Indian Rupee (INR) Enjoys Brief Surge as New RBI Governor Takes Office

The Reserve Bank of India’s (RBI) Governor has been a strong point of speculation for many months, after it emerged that the RBI’s popular previous Governor, Raghuram Rajan, would be stepping down this year.

The announcement surprised and disappointed markets as Rajan had been responsible for what some analysts call some of India’s most pivotal monetary policies.

However, after Rajan’s successor, Urjit Patel, was finally announced in August, markets were reassured that the RBI would likely continue in Rajan’s footsteps.

Patel took over as the RBI’s Governor on Monday, inspiring the Indian Rupee to soar against many major currencies including the weaker US Dollar.

However, the Rupee failed to hold its best levels on Tuesday as an emerging market currency rally wore off. Investors instead sought out more commodity-correlated risk currencies like AUD and NZD.

GBP/INR Forecast: August UK GDP Estimate Ahead

The Pound could continue to capitalise on its current momentum against the Indian Rupee during Wednesday’s session, if British data impresses investors.

Wednesday’s UK datasets include industrial and manufacturing production figures for July in the morning, as well as NIESR’s August Gross Domestic Product (GDP) estimate in the afternoon.

After British PMIs came in well above expectations in August, markets will hope that NIESR’s August growth estimate also impresses. Currently, forecasts predict that the figure will show a low 0.1% score, which would be unlikely to cheer markets.

However, a score higher than this could see the Pound continuing its upward trends towards the end of the week.

As there is little in the way of influential Indian datasets until Monday, the Indian Rupee is more likely to respond to demand for emerging market currencies. If the US Dollar remains weak, another emerging market rally is highly possible.

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TAGS: Currency Predictions Pound Rupee Forecasts Pound Sterling Forecasts