GBP/ZAR Exchange Rate softer after US Fed comments
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Early in the local session South Africa published its Consumer Price Index.
Before the figures were published the emerging market Rand was trending in a weaker position against both the Pound and US Dollar.
The data surprised expectations, coming in worse than economists had anticipated and causing further Rand declines.
Consumer price inflation failed to slow to an annual pace of 6.2% in August, as economists had anticipated, but actually rose to 6.4%.
The result counteracted the impact an earlier announcement from the People’s Bank of China had on the Rand.
After the PBOC announced that it would be unleashing quantitative easing style stimulus and injecting liquidity into five of China’s largest banks, commodity driven currencies like the Rand felt the benefit.
The Rand went on to fall against the Pound, Euro and US Dollar after South Africa’s CPI was published, but declines were fairly modest.
According to the RMB’s Thando Vokwana; ‘We did weaken on the inflation print, but we have come back, as the market did not read much into the inflation number. The Rand strengthened on news of added monetary stimulus in China, combined with talk of European Central Bank (ECB) stimulus. This all points to a firmer Rand environment. Everybody is looking ahead to tonight’s FOMC statement and the Rand will be stuck in the R10.92 – R11.05 to the Dollar range today’.
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate hit a low of 17.7040
Separate data showed that South African retail sales rebounded in July on a month-on-month basis, climbing by 1.2% following a negatively revised decline of -0.4% in June.
Gains in the Pound to Rand exchange rate were also enabled by the UK’s run of positive news.
Firstly, the ‘No’ camp appears to be taking the lead in the run up to the Scottish referendum. Secondly, the UK’s employment stats showed a steeper-than-expected decline in unemployment and a slight improvement in average weekly earnings. Thirdly, the Bank of England meeting minutes pointed at a continuing divide in the nine-member Monetary Policy Committee on the subject of increasing interest rates.
Sterling advance on almost all of its rivals thanks to these positive developments.
Pound Sterling to South African Rand Forecast
If the unionists emerge victorious tomorrow, keeping the United Kingdom intact and delaying the threat of division for at least a couple more years, the Pound could climb by as much as 5% across the board and the GBP/ZAR exchange rate may extend its gains.
Tomorrow’s South African Reserve Bank interest rate decision is also likely to trigger movement in the Pound to South African Rand exchange rate.
The Rand is currently trading against the US Dollar in the region of 10.9170 and trading against the Pound in the region of 17.8130
The South African Rand ticked higher against the Pound and other peers after the US Federal Reserev dismissed expectations for an interest rate hike occurring before the end of the year. Economists are now focusing on the UK’s Scottish referendum vote and the South African Central Banks latest interest rate decision. Most traders are forecasting that the bank will refrain from altering rates due to a run of poor data releases. The banks views may have changed however, after upbeat retail sales data and quickening inflation on Wednesday backed the case for an increase.