GBP to ZAR Exchange Rate Bullish; Pound Sterling Shies From Majors
The British Pound (GBP) to South African Rand (ZAR) exchange rate traded between 17.8988 and 18.0306 on Wednesday, following an end to the latest South African strike, and a depreciation of the Pound in the currency market.
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The South African Rand has been subject to much volatility this year after prolonged strikes struck the South African economy. Members of the National Union of Metal Workers of South Africa (NUMSA) however, have now signed wage contracts that should enable employees to return to work today.
NUMSA representative Irvin Jim commented: ‘The settlement offer has been overwhelmingly and unanimously accepted by our members. We reflected on the strike the whole day yesterday, the impact on the economy, the impact on our members… and we had a resounding mandate that we should settle.’
The strikes appear to have been quelled from NUMSA’s perspective; however some employers find the new agreement less than favourable, such as the National Employers Association of South Africa (NEASA) who have claimed that they will lock out any strikers that attempt to return to work today.
Jim continued: ‘I think one of the things we’re debating is the legality of this lockout. But we’re not in a rush. Today [Wednesday] we’ve signed and NEASA is part of this bargaining council. If they want to meet with us, we’re ready to meet and to listen to their challenges. (But) we’re not opening any negotiations with them—they must comply with the signed agreement.’
Meanwhile, the Pound has depreciated against currency major, the US Dollar (USD) as the US has witnessed an influx of positive figures, and the International Monetary Fund claimed Sterling was overvalued.
Sterling has edged away from the limelight in the currency market, as the US Dollar has swept in; the GBP to USD exchange rate varied from 1.6892 at its low point to 1.6955 at the daily high on Wednesday.
Expert in the field Valentin Marinov commented: ‘It seems like the market is already expecting a considerable tightening from the Bank of England [BoE]. The scope for positive Pound surprises coming from the BoE may be less pronounced than it was in the past. Investors are also starting to pay greater attention to the downside risks for the Pound.’
The UK economy has some significant events occurring by the close of this year, including the vote for Scottish independence which could damage the value of the Pound. Furthermore the UK has been shrouded by debate regarding its position in the European Union with the speculated possibility of an exit.
For now it may appear that the Rand will remain subject to high volatility in the currency market as the last of the strike is settled; however, the Pound despite falling against other majors, will remain bullish against the Rand.