Pound Sterling to South African Rand (GBP/ZAR) Exchange Rate Forecast: Pound Struggles to Shake off BoE Dovishness
While the Pound (GBP) remains bearish after yesterday’s Bank of England (BoE) interest rate decision the Pound Sterling to South African Rand (GBP/ZAR) exchange rate has been trending higher today.
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Pound Sterling (GBP) Exchange Rate Trended Lower after Dovish BoE Rate Hold
The appeal of the Pound Sterling (GBP) has largely declined in response to yesterday’s Bank of England (BoE) policy meeting, where the Monetary Policy Committee (MPC) voted unanimously in favour of leaving interest rates unchanged. This marked a pointed turnaround for the MPC’s previously dissenting hawk Ian McCafferty, while also suggesting that interest rates are now increasingly unlikely to begin increasing in the near future. As the central bank’s quarterly inflation report also dialled back on the BoE’s previous predictions the more dovish tone of policymakers prompted the Pound to slump across the board.
However, as demand for the Rand (ZAR) was relatively muted on Thursday, the losses of the Pound Sterling to South African Rand (GBP/ZAR) exchange rate were somewhat less dramatic. After the World Bank recently indicated that the South African economy could be in potential danger of a recession the risk-sensitive currency has remained largely out of favour with investors.
Stronger US Wage Growth Boosts Pound Sterling to South African Rand (GBP/ZAR) Exchange Rate Today
While concerns over the uncertainty of the UK’s future in the European Union have continued to build ahead of the weekend the GBP/ZAR exchange rate has nevertheless been regaining ground. A mixed US Non-Farm Payrolls report has seen a fresh surge in market risk aversion today, pushing base metals back onto a more bearish trend. Despite job creation having slowed somewhat a stronger pace of wage growth has stoked up speculation that the Fed may still be on line for another interest rate hike in the coming months. The prospect of an uptick in US Dollar (USD) strength has done little for the Rand, negating some of the persistent dovishness of the Pound.
GBP/ZAR Exchange Rate Forecast: Improved South African Manufacturing Production to Shore up Rand
South African Manufacturing Production figures are expected to provoke fresh volatility for the GBP/ZAR currency pair on Monday, with production forecast to have shown some improvement both on the month and the year. Given the gloomier outlook of the domestic economy any reassurance in the recovery of the manufacturing sector could push the Rand onto an uptrend against rivals.
The Pound may rally more strongly on Tuesday, meanwhile, as the UK’s latest Balance of Trade is predicted to demonstrate that the trade deficit narrowed at the end of 2015. Given recent doubts an improved trade balance could ease concerns over the impact of the wider global slowdown on the UK economy, potentially opening the door for a nearer term interest rate hike from the BoE.
Current GBP, ZAR Exchange Rates
At the time of writing, the Pound Sterling to South African Rand (GBP/ZAR) exchange rate was making gains around 23.1170, while the South African Rand to Pound Sterling (ZAR/GBP) pairing was on an uptrend at 0.1817.