Pound to Rand (GBP/ZAR) Exchange Rate Steady, USD/ZAR Declines for Fifth Day
If you're looking to make an international money transfer, we recommend TorFX.
The emerging-market Rand retained declines against the US Dollar as domestic economic concerns and the prospect of a Federal Reserve interest rate increase taking place in the near future kept demand for South African currency subdued.
This week’s run of encouraging US reports (including better-than-forecast second quarter growth data and impressive employment figures) have upped the odds of the Fed adjusting its stance on keeping borrowing costs at record lows over the next few months.
Meanwhile, South Africa’s own economic outlook has been severely undermined by the recent strike action.
Yesterday a report showed that South Africa’s trade deficit narrowed by more than anticipated thanks to a slight climb in export levels. However, as the report is proof that the nation is struggling to get its trade balance under control, the result did little to support the Rand.
As stated by economist Christie Viljoen; ‘This is bad news on top of other disappointing economic data. July’s trade report will not encourage much optimism either due to impact of National Union of Metal Workers of South Africa Strike.’
Although China’s Manufacturing PMI for July (published during Australasian trading) would ordinarily have boosted commodity-currencies, the Rand failed to see any notable benefit.
China’s HSBC Manufacturing PMI achieved an 18-month high in July thanks to increases in total new orders and output.
Economist Hongbin Qu noted; ‘The HSBC China Manufacturing PMI rose to 51.7 in the final reading for July, the highest since early 2013. This is slightly lower than the flash reading […] Nevertheless, the economy is improving sequentially and registered across-the-board improvement compared to June’.
The Rand even held its position against the Pound as the UK currency was weakened by a less-than-impressive domestic Manufacturing PMI reading.
The UK’s measure of manufacturing fell to its lowest level for a year, coming in at 55.4 instead of the 57.2 expected.
The previous month’s figure was revised down from 57.5 to 57.2.
Pound Sterling to Rand Forecast
The South African economic reports to focus on next week include the nation’s KASIGO Manufacturing PMI, Foreign Exchange Reserves figures and Manufacturing Production data.
Given that the five-month long strike in the platinum sector has ended and the more recent metalworkers strike has been resolved (to the satisfaction of some at least), the reports may show improvement.
The Bank of England’s interest rate decision could also be a cause of some Pound Sterling to Rand movement, although the central bank is unlikely to alter policy.
However, if the UK data releases (including the nation’s PMI’s for the Construction and Services sector) come in below estimated levels, we forecast that the Pound could tumble against peers like the Rand.
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate is currently trading in the region of 18.0880.