Pound Sterling to South African Rand (GBP/ZAR) Exchange Rate Trending High on Improved Sentiment
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate jumped by over 1% on Thursday as the markets responded to UK developments and the South African Reserve Bank’s interest rate announcement.
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Sterling was broadly stronger as economists bet that Scotland will vote against independence and opt to remain a part of the UK.
The week’s upbeat UK reports, including the nation’s better-than-forecast jobs figures and fairly positive retail sales data, also lent the Pound support.
Emerging-market and commodity-driven currencies like the Rand also weakened in reaction to a slightly hawkish edge to the Federal Open Market Committee’s interest rate decision.
The Rand weakened beyond 11 Rand per US Dollar in the immediate aftermath of the FOMC announcement. As stated by the Rand Merchant Bank; ‘The Dollar has gained sharply, initially breaking to a four-year high on a trade-weighted basis, although it has since slipped back slightly.’
The USD/ZAR exchange rate extended gains on Thursday as the US published better-than-expected initial jobless and continuing claims figures and the SARB opted to hold interest rates.
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate hit a high of 18.1880
The GBP/ZAR pairing jumped after the central bank left the repurchase rate at 5.75%, as expected by the majority of economists.
In its statement SARB noted; ‘The domestic growth outlook remains weak following growth rates of -0.6% and 0.6% in the first and second quarters of the year respectively. These growth rates are well below potential output growth and indicative of a widening output gap. […] the Bank’s forecast for GDP growth for 2014 has been revised down further to 1.5% from 1.7% previously, with the risks still assessed to be on the downside.’
It went on to add; ‘While inflation is the primary focus of the Committee, the MPC is also mindful of the anaemic state of the domestic economy, rising unemployment and the downside risk to its growth forecast. […] Despite the 75 basis point increase so far this year, monetary policy remains accommodative, and will continue to be supportive of the domestic economy subject to achieving its primary inflation targeting objective.’
The strength in the Pound to South African Rand exchange rate could persist into the weekend if Scotland does vote against independence.
Next week the only notable South African data to be aware of is the nation’s Producer Price Index.
The Rand is currently trading against the US Dollar in the region of 11.0816 and trading against the Pound in the region of 18.1066
The Pound Sterling to South African Rand exchange rate is currently trending in the region of 18.1851.
Following the 55.3% victory for the Unionists in the Scottish referendum Sterling surged against the South African Rand. It has cooled fractionally since the initial gains but is still trending highly as trader sentiment towards the Pound has improved considerably.
With a lack of data pertaining to both the UK and South Africa the GBP/ZAR exchange rate is unlikely to be subject to much volatility over the course of Friday.