Pound Sterling to Indian Rupee (GBP/INR) Exchange Rate Forecast: Rupee Extends Gains ahead of FOMC Rate Decision
A disappointing decline in UK Average Weekly Earnings has seen demand for the Pound (GBP) drop further today, with the Rupee (INR) on a strong uptrend.
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Pound (GBP) Trended Lower as Improved UK Inflation Failed to Boost Odds of BoE Hike
Despite the November UK Consumer Price Index returning to positive territory, with baseline inflation climbing back from -0.1% to 0.1%, this failed to particularly boost Pound Sterling (GBP) yesterday. Part of this unenthusiastic reaction was due to expectations that domestic inflation will remain weak over the coming months, as well as the fact that this figure remains woefully short of the Bank of England’s (BoE) inflation target of 2%. As a result the odds of the BoE moving on interest rates in 2016 were dented, weighing on the Pound throughout the rest of the day.
Tuesday also saw the Indian Rupee (INR) on bullish form after the domestic Balance of Trade was found to have widened by a much smaller amount than expected. Bettering forecasts of a -10.5 billion Rupee deficit the figure instead printed at -9.78 billion, suggesting that the local economy was not in as weak a state as might have been thought. This stronger showing prompted the GBP/INR exchange rate to slump further.
Decrease in UK Average Weekly Earnings Drags GBP/INR Exchange Rate Lower Today
The outlook for the Pound did not improve today in spite of the ILO Unemployment Rate unexpectedly falling from 5.3% to 5.2%, indicating that the UK is approaching a state of full employment. Investors were more concerned with the news that Average Weekly Earnings had slumped to a lower level than forecast, sliding from 3.0% to 2.4% in the three months to October. As BoE policymakers have repeatedly highlighted the need to see stronger wage growth before voting for higher interest rates this dealt a further blow to the chances of tighter UK monetary policy in the near future.
While markets have been preparing for the Federal Open Market Committee (FOMC) to raise interest rates this evening the Rupee has, nevertheless, remained in high demand. Although a stronger US Dollar (USD) is likely to weigh heavily on the emerging-market currency, the probability that Fed Chair Janet Yellen will opt to take a more dovish tone with regards to future monetary tightening has raised hopes of a more limited impact.
GBP/INR Exchange Rate Forecast: Pound Weakness to Continue as UK Retail Sales Predicted to Slow
Things are not likely to pick up for Sterling tomorrow as November UK Retail Sales are predicted to have declined on the year from 3.0% to 2.3%. Should consumer demand be shown to have picked up, however, the Pound could make some gains.
Largely the coming days will be dominated by the aftermath of the FOMC decision, with particular volatility expected for the Rupee.
Current GBP, INR Exchange Rates
At time of writing, the Pound Sterling to Indian Rupee (GBP/INR) exchange rate was slumped in the region of 100.0600, while the Indian Rupee to Pound Sterling (INR/GBP) pairing was unchanged at 0.0100.