GBP/ZAR Exchange Rate Plummets; Pound Sterling Softer
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The over 0.3% decline in the Pound to Rand pairing was the result of less-than-impressive UK data.
The US Dollar to South African Rand exchange rate, on the other hand, rallied to a four and a half weekhigh on Wednesday as weak fundamentals for South Africa and the looming European Central Bank policy meeting kept demand for the Rand limited.
Risk-appetite was also restrained amid reports that Russian troops have been deployed to the Ukrainian boarder.
According to one locally-based trader; ‘The Rand has gone lower in conjunction with everyone else. It’s been a risk-off day. It’s been an emerging market sell-off day led by Russia.’
Widespread Sterling losses were triggered by a serious of sub-par UK economic reports.
Tuesday’s UK Services PMI might have surpassed expectations but today’s Shop Price Index and Manufacturing/Industrial production figures fell short of forecasts.
The British Retail Consortium’s Shop Price Index showed an annual drop of 1.9%, notably steeper than the year-on-year contraction of 1.6% anticipated and a further depreciation on the -1.8% decline recorded in June.
This data saw the Pound pare some of Tuesday’s gains and the British asset extended losses after the UK’s Industrial and Manufacturing Production reports also came in below expected levels.
While month-on-month increases of 0.6% had been forecast for both sectors, Manufacturing and Industrial Production actually only climbed by 0.3% on the month in June.
Pound losses were a little limited as Halifax figures showed a strong surge in UK house prices. In the three months to July, prices surged by 10.2% on a year-on-year basis, prompting this response from economist Rob Wood; ‘The housing market is shaking off new mortgage rules. This is important, as the BoE has recently been pointing to the housing market as a good reason for broader economic growth to slow.’
However, a very disappointing UK GDP estimate from the National Institute of Economic and Social Research ensured that the Pound ended the local session on a low. NIESR reported month-on-month growth of 0.6%, less than the negatively revised expansion of 0.8% recorded for June.
Pound Sterling to Rand Exchange Rate Forecast
The Pound Sterling to South African Rand exchange rate hit a low of 18.0260 during the European session.
Tomorrow is data heavy and movement in the GBP/ZAR pairing is likely to be driven by several factors, including South Africa’s Manufacturing Production data for June.
The Bank of England’s interest rate decision will also be worth noting (although policy is highly unlikely to change) as will the European Central Bank’s own interest rate decision.
The Pound Sterling to South African Rand exchange rate is currently trending in the region of 18.0860.