Pound to Rand (GBP/ZAR) Exchange Rate Climbing in Anticipation of UK Inflation
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The Pound has suffered poor exchange rates after a less than favourable few weeks of late, by way of poor UK economic data; meanwhile the Rand has suffered volatility following seven months of mining and metalworking strikes.
However, the Rand appeared to be gaining the opportunity to hold some stability in the currency market following the supposed end of the latest National Union of Metalworkers of South Africa (NUMSA) strike. Unfortunately, the end has not met a tidy conclusion as some would have hoped.
Last week announced the downing of three senior NUMSA union leaders, with a fourth severely injured and presently hospitalised.
The victims were shot in the back and then the head, which has caused fear in the aftermath of strike action which is still currently unresolved. Although the majority of the 300,000 strike members have returned to work, 80,000 employees still face lock-outs from employers (National Employers Association of South Africa, NEASA) who refuse to raise wages by the agreed amount, despite contracts being signed.
NUMSA representative Mbuso Ngubane commented: ‘We are extremely concerned by the killing of these three leaders. Their untimely and senseless deaths rob the union of three of its best and promising workers and trade union leaders in our province. It also removes three breadwinners from three families.’
However, as talks are still ongoing to end the lock-outs, fears of situations escalating are rife.
Meanwhile the South African Communist Party stated: ‘We are extremely worried about a trend towards the use of intimidation, violence, and killings by criminal elements to manufacture the consent of workers and union leaders. This must come to an end with immediate effect.’
The Pound conversely is trading up in the currency market against majors such as the Euro (EUR) as the UK anticipates inflation figures on Wednesday this week.
Forex Expert Michael Sneyd commented: ‘In terms of key events this week, it would be the Inflation Report. Long Sterling is one of the largest positions in G10 FX, but this long Sterling positioning has been pared back the last couple of weeks.’
Furthermore the UK is shrouded in speculation regarding interest rate hikes, with hopes that the meeting minutes could prove favourable in the coming weeks.
Sneyd continued: ‘If we do continue to get an indication from Carney that rate hikes are on schedule for November, then there’s scope for Sterling to rebound this week.’
This week will see the Pound fluctuate from the highly influential Inflation Report, whilst the Rand will be subject to volatility with the present South African strike conflicts, Retail Sales figures on Wednesday and Mining Production reports on Thursday.
The South African Rand to Pound exchange rate is currently trading at 0.0557.