The Pound fell against the Indian Rupee on Friday after a disappointing week for Sterling. The British currency dropped against other majors this week when it emerged that the Bank of England had no policymakers willing to vote in favour of interest rate hikes at the last meeting in early January. The result saw many investors price in rate hikes in 2016 rather than 2015, which may be able to keep consistent pressure on a weaker Pound. Economist Ben Brettell commented: ‘[This has been] a significant shift in the expected path for interest rates. Many forecasters had been expecting the first rise to come later this year, but now looks extremely unlikely. This further reinforces my view that they will remain on hold throughout this year and into 2016.’
One bright spot for the UK economy was Friday’s Retail Sales stats which hovered above economists’ expectations. The annual figure sank in December on the year to 4.3% from 6.4% including autos. The number was expected to soften to 3.0%. The UK Unemployment Rate also sank this week, falling from 6.0% to 5.8%. The unemployment sector also beat forecasts of a softer decrease to 5.9%. Positive UK economic data would usually offer the Pound a boost, but the interest rate decision is weighing too heavily for positive movement.
The Reserve Bank of India (RBI) recently slashed interest rates, after much speculation, as inflationary pressures retreated. The RBI has also been taking steps toward protecting its customers against fraud this week, strengthening the banking system. RBI Director NS Vishwanathan stated: ‘The Financial Sector Legislative Reforms Commission (FSLRC) report recommends adoption of consumer protection framework that will empower and require regulators to ensure consumer protection for the financial activities regulated by them. The bank is in the process of framing comprehensive consumer protection regulations based on domestic experience and global best practices.’