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Pound Sterling to Indian Rupee (GBP/INR) Exchange Rate Forecast to Trend within Limited Range as Indian Deflation Prompts RBI Intervention Speculation

Indian Rupee Currency Forecast

The Pound Sterling to Indian Rupee (GBP/INR) exchange rate was trending within a limited range on Monday afternoon.

Although British economic data showed house prices rose in June, the Pound slumped versus many of its currency competitors. The depreciation can be attributed to fears regarding the European Union referendum and the fallout it will cause. Standard and Poor’s downgraded the UK’s credit rating from AAA ‘secure’ to AAA ‘negative’ as a result of predictions that the EU referendum will be a drag on economic progress.

The Indian Rupee, meanwhile, softened versus many of its peers despite falling crude oil prices. The downtrend is the result of Indian inflation remaining in negative territory and stoking speculation that the Reserve Bank of India (RBI) will continue easing policy.

The Pound Sterling to Indian Rupee (GBP/INR) exchange rate is currently trending in the region of 99.5670.

Pound Sterling (GBP) Exchange Rate Forecast to Hold Steady versus the Rupee despite Rising House Prices

British data produced positive results on Monday but had minimal impact on the Pound. Rightmove House Prices increased by 4.5% in June on the year and by 3.0% in June on the month. Peter Woodthorpe, director of Readings in Leicester, said; ‘While we’ve had even more prospective buyers come into the market after the election, we haven’t seen an increase on the supply side. The demand has been strong from people looking for all types of property, from flats to large detached houses.’

The Pound is seemingly struggling against fears that the EU referendum will weigh on investor confidence and result in sluggish economic progress. Since the UK’s outlook was downgraded, the Pound is generally trading in a weak position. ‘The decision of the newly elected Conservative majority government to hold a referendum on the UK’s EU membership by 2017 represents a risk to growth prospects for the UK’s financial services and export sectors, as well as the wider economy,’ S&P wrote in a note explaining its outlook change.

‘Our understanding is that, as the newly elected UK government enters into negotiations with its EU partners for potential treaty change, the aim is to agree at the same time upon a constitutional settlement devolving wide-ranging powers to Scotland. We find these objectives ambitious and may well take precedence over other policy imperatives, such as how to address the supply bottlenecks in UK infrastructure and in the housing market,’ said the S&P note.

The Pound Sterling to Indian Rupee (GBP/INR) exchange rate has fallen to a low of 99.2370 today.

Indian Rupee (INR) Exchange Rate Forecast to Trend Statically versus the British Asset as Inflation Remains Negative

Indian economic data showed inflation remained firmly in negative territory in May, prompting speculation that the RBI will continue the current easing cycle. ‘This should propel the RBI (Reserve Bank of India) to continue with its rate easing cycle to support demand and strengthen the nascent recovery in industrial production,’ said Chandrajit Banerjee, director general, Confederation of Indian Industry (CII).’

Arvind Subramanian, chief economic advisor to the finance ministry, stated; ‘So, is the current policy stance appropriate? Of course, that is difficult to say but at the very least, there needs to be more analytical discussion. In particular, there needs to be greater recognition that these are unusual times; that real policy rates have diverged significantly for consumers and producers, and are unusually high for the latter; and that for producers, high real rates must also be seen against their balance sheet problems.’

Pound Sterling to Indian Rupee (GBP/INR) Exchange Rate Forecast to Hold Steady ahead of UK Consumer Price Index

With a complete absence of further domestic data publications to provoke changes, the Pound Sterling to Indian Rupee (GBP/INR) exchange rate is likely to hold steady for the remainder of Monday’s European session. Tuesday is likely to see GBP/INR volatility with British inflation data due for publication.

The Pound Sterling to Indian Rupee (GBP/INR) exchange rate advanced to a high of 99.7220 today.