British Pound to South African Rand (GBP/ZAR) Exchange Rate Declines on Soft UK Data
Following dovish speeches from two of Bank of England policymakers on Thursday, the Pound has declined against the majority of its most traded currency peers. Friday’s British data has only aided Sterling’s downfall and the asset is currently trending lower across the board. Meanwhile, South African data on Friday has printed positively which has caused the South African Rand to appreciate against many of its competitors.
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The Pound Sterling to South African Rand exchange rate is currently trending in the region of 18.0600.
On Thursday the Pound depreciated against the majority of its peers after Bank of England policymakers Ben Broadbent and Kristin Forbes gave dovish speeches regarding the normalisation of monetary policy.
In an interview with ITV, Broadbent said that the time is not ripe for a rate hike. The selling pressure from Broadbent’s remarks was strong enough to offset a better-than-expected UK construction print.
Kristin Forbes further aided the Sterling downtrend after she gave her maiden speech in London. ‘Sterling’s past moves have reduced the risk of inflation increasing sharply, despite the strong growth in employment and the overall economy […] The dampening effect of Sterling’s past appreciation, however, will peak at the end of 2014 and then begin to fade,’ she said.
The South African Rand appreciated on Thursday as a result of a softening US Dollar. Fears that the US Dollar’s recent bullish run wasn’t warranted by data saw traders pull away. Speculations of an early 2015 rate hike caused traders to purchase the Dollar in droves despite some negative domestic data results over the past month or so. The high valued US Dollar pushed down emerging-market currencies like the South African Rand, which appreciated once the American currency had softened a little.
The Pound Sterling to South African Rand exchange rate hit a low today of 17.9910.
Friday’s British data has printed negatively which has meant a continuation of bearish Sterling behaviour. The UK Services PMI was forecast to tic lower from 60.5 to 59, but the actual result showed a declination to 58.7. Also the Composite PMI fell beyond expectations of a drop from 59.3 to 58.2, with the actual data showing a declination to 57.4. David Noble, Group Chief Executive Officer at the Chartered Institute of Purchasing & Supply said; ‘Looking across all sectors and the third quarter of 2014 as a whole, it is clear that we currently have a two-speed economy. The manufacturing sector appears to be heading towards stagnation whilst the construction and services sectors continue to power ahead and drive overall UK economic growth’.
Conversely, South African data was positive on Friday. The KASIGO Manufacturing PMI was forecast to decline from 49.0 to 46.92, but the actual result showed an increase to 50.7. David Faulkner, Economist at HSBC, said; ‘Demand indicators led the improvement, with marked increases in output and new orders, while companies rebuilt inventories in anticipation of recovering demand. Export orders also stabilised following their recent weakness providing hope for better trade balance figures following last month’s large deficit. Overall, these demand dynamics are supporting more favourable labour market developments, and the employment sub-index expanded at its fastest pace since the middle of last year’.
Forecast for the Pound to South African Rand Exchange Rate
Although there is no more British or South African data on Friday there is the slight potential for the GBP/ZAR exchange rate to firm up if US data prints positively. Should US labour market data equal or expand upon the market consensuses then emerging market currencies have the potential to soften. Should this occur then the Pound will strengthen a little against the Rand, although this won’t be a dramatic reversal in fortune.