Pound Sterling to Indian Rupee (GBP/INR) Exchange Rate Forecast to Dive after BoE Cut Growth Forecast

The Pound Sterling to Indian Rupee (GBP/INR) exchange rate softened by around -0.50% on Wednesday morning. Although British labour market data produced a positive set of results on Wednesday, the Pound softened versus many of its most traded currency peers. The declination can be attributed to the Bank of England (BoE) cutting the growth forecast for the year. The Indian Rupee, meanwhile, strengthened versus many of its major peers after the Reserve Bank of India (RBI) limited intervention after the Rupee hit a 20-month low versus the US Dollar. This suggests that the institution welcomes a weaker currency. Aiding the uptrend is a weaker US Dollar which spurred demand for emerging-market currencies. The Rupee gains have been somewhat sluggish, however, as oil prices rise. The Pound Sterling to Indian Rupee (GBP/INR) exchange rate is currently trending in the region of 100.0800.

Pound Sterling Softens despite Positive Labour Market Data
British economic data printed positively on Wednesday. Average Weekly Earnings, Claimant Count Rate, Unemployment Rate and Jobless Claims Change all either matched or bettered the median market forecast figures.
However, the Pound softened after an initial knee-jerk reaction to the jobs data after the Bank of England Inflation Report revealed that the institution slashed growth forecast for the year from 2.9% to 2.5%. The BoE did, however, stated that there was ‘little sign’ of the UK slipping into deflation. ‘In the absence of further shocks, to return inflation to the target, it is necessary to eliminate the remaining degree of economic slack,’ said Governor Mark Carney. Officials will return inflation to the target ‘as quickly as possible’ after the impact of commodity-price drops eases. The Pound Sterling to Indian Rupee (GBP/INR) exchange rate dropped to a low today of 99.9940.

Indian Rupee Gains on Soft US Dollar
The bearish US Dollar has seen emerging-market currencies, such as the Indian Rupee, strengthen from heightened demand. The Rupee advance has been somewhat sluggish, however, as rising crude prices weigh on Indian imports. The higher crude prices are the result of heightened tension in the Middle East and speculation that the US will reduce output. The main contributing factor to the Rupee’s climb is the result of the RBI having limited intervention despite sliding to a 20-month low versus the US Dollar. This suggests that the RBI welcomes a weaker domestic currency and wishes to save ammunition in case volatility accelerates once the US begins a benchmark rate hike cycle.

Pound Sterling to Indian Rupee (GBP/INR) Forecast to Hold Losses
With an absence of domestic data to curb the trend, and with demand for the Pound faltering after the Inflation Report, the Pound Sterling to Indian Rupee (GBP/INR) exchange rate is likely to hold losses for the remainder of Wednesday’s European session.Thursday is likely to see heightened GBP/INR volatility with Indian Inflation and Manufacturing data due for publication. The UK 5-Year Treasury Gilt Auction may be of interest to those invested in the British asset.
The Pound Sterling to Indian Rupee (GBP/INR) exchange rate reached a high of 100.8000 today.