Pound Sterling to Indian Rupee (GBP/INR) Exchange Rate Forecast to Tick Lower after BoE Cuts UK Growth Forecasts
GBP/INR Exchange Rate Forecast to Edge Lower after UK Central Bank Holds Rates
The Pound Sterling to Indian Rupee (GBP/INR) exchange rate softened by around -0.5% on Thursday afternoon.
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After the Bank of England (BoE) opted to hold the cash rate, and after meeting minutes revealed that just one policymaker argued for an immediate hike, the Pound Sterling dived across the board. Adding more downwards pressure was the BoE’s quarterly inflation report which was a particularly dovish print with inflation expected to remain well below target throughout 2016. The BoE also cut growth expectations for both 2015 and 2016; further weighing on investor sentiment and fuelling predictions of long-term delays to a BoE rate hike.
Martin Beck, senior economic advisor to the EY ITEM Club, agrees that the Bank was more downbeat than expected, stating; ‘While we expected a downgrade to the MPC’s growth and inflation forecasts in November’s Inflation Report, the MPC’s latest assessment of the economy struck an unexpectedly dovish tone for interest rates. Based on market expectations that the first interest rate rise won’t happen until Q1 2017, the MPC forecast that inflation would only slightly exceed the 2% target by that date. This implies the Committee’s view of the appropriate timing of a rate rise is roughly in line with the market consensus.’
The Pound Sterling to Indian Rupee (GBP/INR) exchange rate is currently trending in the region of 100.2300.
INR/GBP Conversion Rate Predicted to Edge Higher as Oil Price Fall
Despite the fact that crude prices have fallen during the European session, the Indian Rupee dived against all but the Pound in response to mounting geopolitical tensions. With war raging between India and Pakistan, the threat of full-blown nuclear attacks is having a particularly damaging impact on Rupee sentiment.
In accordance with David Barno, the Indian subcontinent – home to both India and Pakistan – remains one of the most dangerous corners of the world; ‘Since 2004, India has been developing a new military doctrine called Cold Start, a limited war option designed largely to deter Islamabad from sponsoring irregular attacks against New Delhi. It involves rapid conventional retaliation after any such attack, launching a number of quick armoured assaults into Pakistan and rapidly securing limited objectives that hypothetically remain below Pakistan’s nuclear threshold. In accordance with this doctrine, the Indian military is meant to mobilise half a million troops in less than 72 hours.’
The Pound Sterling to Indian Rupee (GBP/INR) exchange rate dropped to a low of 100.2200 during Thursday’s European session.
Pound Sterling to Indian Rupee (GBP/INR) Exchange Rate Forecast to Hold Losses on Dovish BoE
Given the extent of Sterling losses following the particularly dovish Bank of England (BoE) inflation report, the Pound is likely to hold a weak position versus its major peers over the course of tomorrow’s trade. Therefore the GBP/INR exchange rate is predicted to hold losses. However, British Trade Balance, Industrial Production and Manufacturing Production data may cause changes. India’s Foreign Reserves data may provoke Rupee volatility, although geopolitical tensions are likely to overshadow domestic data results.
The Pound Sterling to Indian Rupee (GBP/INR) exchange rate climbed to a high of 101.2200 during Thursday’s European session.