In the kerb today:
The rupee fell to new lows against pound sterling in the kerb today and the currency jumped up to new highs in the history of kerb trading overnight. Pound sterling has touched Rs. 115/- mark for the first time in the history of currency trading here in the kerb. This is the first time that sterling has touched Rs. 115/- mark in the kerb and has broken all its previous records. Earlier sterling’s highest price ever recorded was Rs. 114/85 which was on 1st Dec. 2004. Sterling is putting technical pressure on rupee while active trading is already taking place in the market these days. Not only the buyers but there are significant sellers in the market too who are trading the currency for booking short term profits. On the other hand, the individuals who earlier held the currency are selling it off for profit taking. There is good supply of sterling due to this reason while demand is persisting against it constantly.

Reason for sterling’s robust:
The major reason of this robust acceleration is its performance against the green back in the international market where an unexpectedly strong manufacturing PMI survey from the UK combined with Mervyn King’s bullish comments yesterday, paved the way for another 2.5% rally in cable towards a fresh 12-year high of $1.9334. Britain’s manufacturing PMI jumped to its highest level since July at 55.0, beating both last month’s figure at 53.5 and consensus forecasts of a dip to 52.5. This was the survey’s 17th straight time above the key 50 level, denoting a contraction and an expansion.

Yesterday’s comments from Bank of England governor Mervyn King indicating the potential trade advantages emanating from sterling’s decline against the euro were the big catalyst to the latest run-up. King said: "The pound doesn't pose major competitive problems now and I do think that with the adjustment, that (the trade deficit) may come down". With King practically ignoring the impact of sterling’s rise versus the dollar, traders interpreted the King as unruffled by the rise in GBP/USD.

Short term trend:
Breaking the key $1.9140 level past $1.93, cable could extend to $1.9360, before retreating to as low as 1.9050 as early as tomorrow while support follows at 1.9020 and 1.8870. This indicates that the national currency would remain under prevailing pressure and sterling may set new levels breaking today’s by tomorrow here in the kerb as well. With chances of $1.9360, rupee may fall up to Rs. 115/20 before starting its correction phase. At the same time, we also expect that rupee may retreat trading near Rs. 113/35. This suggests a price range of Rs. 113/35-115/20 in the next few sessions.

Sterling on rise:
As a matter of fact, pound sterling is showing constant gains in the last few months especially and has never looked back. The following chart shows the gradual rise in the price of sterling in the last fifteen working days:
 

The chart further elaborates these statistics:


 

It can be seen from the chart that sterling is constantly on an upward ride since last two weeks and has picked its momentum in the last three days. Pound sterling continued to improve its standing against rupee last week too and enjoyed gains mostly except slight recovery moves made by the rupee in some sessions. Overall sterling remained strong and gained significant grounds totaling to Rs. 2/- at close of markets on Saturday. The currency closed at Rs. 112/70 as compared to Rs. 110/70 previous week. Sterling remained in full swing since it broke its flag formation by breaching through the $1.8650 figure with chances of another rise in the short term.

Sterling; The smart performer of the year so far!
The rupee has been trading under tremendous pressure against pound sterling this year and has already depreciated by 13.2 %. The rupee had started this year at Rs. 101/80 while as of today has already crossed the Rs. 115/- mark, thus showing an increase of Rs. 13/20. Rupee is losing grounds against sterling on a continuous basis amid the rapid rise in the international price of sterling based on a number of reasons.

The rupee had set its highest record level on July 17th when it traded above Rs. 109/- level and was all set to cross Rs. 110/- barrier which it did. In the month of July, sterling crossed Rs. 109/00 mark and at one stage went as high as Rs. 109/15 which is the highest price of sterling in the history of kerb trading. Continuous gains in the price of sterling were recorded and the currency standings were mainly affected by the continuous rise of sterling against the US dollar in the international market and thus, its direct effects were recorded here in the kerb as well.

The line is clearly showing the gradual rise of sterling and rupee has never been able to come back strongly besides the routine short term recoveries.