GBP INR Exchange Rate Fluctuates Ahead of UK Growth Report

April 27, 2017 - Written by James Fuller

STORY LINK GBP INR Exchange Rate Fluctuates Ahead of UK Growth Report

The Pound Indian Rupee (GBP INR) exchange rate continues to fluctuate this week ahead of the release of the UK’s Q1 GDP figures tomorrow.

Economists expect that the UK’s economic growth is likely to have fallen at the start of 2017 as the consequences of Brexit finally begin to catch up, leading GDP to fall from 0.7% to 0.4% in the first quarter.
Analysts attributed the slowdown to the decline of Sterling and subsequent uptick in inflation that has prompted consumer spending to fall since the New Year as household consumption remains one of the largest economic indicators in the UK.

Howard Archer, chief UK and Eurozone economist at IHS Markit, said;

‘Businesses will likely become more cautious over investment and employment as the economy shows increasing signs of slowing and uncertainties over the outlook are magnified by Brexit negotiations coming to the forefront now that the government has triggered Article 50.’

However the Pound was able to find some strength this morning thanks to an upbeat car manufacturing report from the Society of Motor Manufacturers and Traders (SMMT), which showed that rising overseas demand caused the sector to have its strongest month since 2000.

The data showed that UK car makers produced 170,691 vehicles in March as a weakened Sterling may British car’s more attractive to foreign buyers, although the SMMT also warned that the rising cost of importing parts was placing increasing pressure on the sector.

Meanwhile the Indian Rupee struggled to push higher as analysts predict that demand for INR has already peaked this year.

Divya Devesh, at Standard Chartered in Singapore said;

‘The likely slowing of portfolio inflows, continued intervention by the central bank amid higher real-effective exchange rates, and wider trade deficits given seasonal factors could slow the pace of further rupee appreciation.’

The rupee rallied 4.7% in the first quarter of 2017, its fastest quarterly growth since 1975 as foreign investors flocked into the market after Prime Minister Narendra Modi’s bold economic reforms and stellar performance state elections caused the emerging market to be an attractive prospect for traders.

Looking ahead the GBP INR exchange rate is likely to tumble following the release of the UK’s GDP figure tomorrow, with the Pound also likely to soften after Gfk’s Consumer Confidence report, with household sentiment expected to slide from -6 to -7 in April thanks to the pressures of rising inflation and weak wage growth.

Meanwhile the Indian Rupee may be bolstered on Friday as analysts forecast that Indian’s Infrastructure Output will have rebounded last month after tumbling to 1% in February.

Current Interbank Exchange Rates

At the time of writing the GBP INR exchange rate was trending around 82.71 and the INR GBP exchange rate was trending around 0.01.

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