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Pound to Indian Rupee Exchange Rate (GBP/INR) Rises 0.3% on 2019 Rate Hike Hopes

November 1, 2018 - Written by David Woodsmith

Wednesday saw the Pound open trading against the Indian Rupee at a level of INR93.6148 in the morning and later close at a higher exchange rate of INR94.5870.

Yesterday saw an apparent Brexit hiccup on the part of Brexit Secretary Dominic Raab, which led to a sharp GBP/INR exchange rate rise.

A letter sent by Mr Raab suggested that Brexit talks could be wrapped up by 21st November; this apparent prediction boosted GBP trader confidence.

Mr Raab later clarified that 21st November had been misinterpreted as the date that Brexit could end, but the Pound to Rupee exchange rate continued to rise in spite of this.

Yesterday’s Indian data was fairly disappointing, with September’s year-on-year infrastructure output reading shifting from 4.7% to 4.3%.

Pound to Indian Rupee Exchange Rate Rises on BoE’s Rate Hike Hints

The Pound (GBP) has risen by 0.3% against the Indian Rupee (INR) today, following a broadly positive meeting of Bank of England (BoE) officials.

BoE policymakers left interest rates at 0.75% as expected, but later remarks inspired cautious optimism among Pound traders.

In a press conference following the rate decision news, BoE Governor Mark Carney suggested that there could be an interest rate hike even in the event of a no-deal Brexit.

This was considered an unusual statement by Mr Carney, although the suggestion of higher interest rates next year by any means was enough to boost GBP demand.

Considering the other side of the coin, Ruth Gregory of Capital Economics said that securing a Brexit deal could bring multiple rate hikes next year:

‘There was never much chance the MPC would do anything at this month’s meeting.

‘Nonetheless, the release still supports our view that provided a Brexit deal is struck, market expectations are underestimating the pace of monetary policy tightening further ahead.

‘Based on the fiscal loosening announced in the Autumn Budget, we now think that interest rates will rise three times in 2019 (rather than twice) assuming a 'no deal' Brexit is avoided.’

The takeaway conclusion was that if there will be any interest rate adjustments next year, they aren’t likely until after March when the UK is meant to enter the Brexit transitional period.

Indian Rupee to Pound (INR/GBP) Exchange Rate Dips despite Manufacturing Sector Growth

The Indian Rupee (INR) has fallen against the Pound (GBP) today, although the morning’s Indian manufacturing data printed positively.

Nikkei’s manufacturing PMI for October revealed a rise from 52.2 points to 53.1, beating expectations for a slowdown to 51.9 points.

Commenting on the mixed nature data, IHS Markit Principal Economist Pollyanna De Lima said:

‘Manufacturing continued to make up for ground lost in August, with a robust and accelerated rise in new orders boosting production growth in October.

‘The trend for employment was particularly encouraging, (…) however goods producers see challenges and uncertainties ahead, which in turn translated into the weakest degree of optimism seen in 20 months.’

Given the positive figures that came out of the data, the Rupee’s decline against the Pound today is mainly because of the latter currency’s strength.

Pound Sterling to Indian Rupee Exchange Rate Forecast: Will UK Construction Slowdown Cause GBP/INR Losses?

PMI data will likely be the next source of GBP/INR exchange rate movement, with the UK’s construction reading out tomorrow and the services PMI out on Monday.

Current forecasts are for contrasting results, with a decline in construction sector activity anticipated alongside a minimal improvement for the services PMI.

While there might be Pound to Rupee exchange rate losses tomorrow, the UK currency could still appreciate if next week’s services PMI impresses GBP traders.

The services sector is the single largest contributor to UK economic growth, so a higher-than-expected rise in sector activity could trigger a major GBP/INR exchange rate rise.

There is an additional chance of the Pound rising against the Indian Rupee if Monday’s Indian Nikkei services PMI shows a forecast-matching decline.
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