Pound Sterling to South African Rand (GBP/ZAR) Exchange Rate Forecast to Rally on Bullish US Dollar
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate rallied over 1.0% on Thursday afternoon.
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In general, the Pound softened versus many of its major competitors after growth estimates stagnated in the first-quarter. Damp sentiment amid fears of a long period of political uncertainty in the run up to an in/out European Union referendum has also weighed heavily on demand for the UK asset.
The South African Rand, meanwhile, dived versus many of its closest rivals in response to a bullish US Dollar. With predictions for a 2015 Federal Reserve rate hike increasing, demand for high-yielding risk-correlated cooled significantly. Aiding the Rand downtrend was soft producer prices and ongoing difficulties with the nation’s leading energy provider, Eskom.
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate is currently trending in the region of 18.6320.
Pound Sterling (GBP) Exchange Rate Forecast to Strengthen against the Rand despite Stagnant Growth Estimates
In response to unchanged estimates for British growth in the first-quarter, the Pound edged lower versus many of its closest currency competitors. Expectations for a 0.1% upward revision on both an annual and quarterly basis were missed and traders sold the British asset as they flocked to the bullish US Dollar.
‘Markets decided to sell Sterling on the back of the GDP data,’ said Neil Mellor, a currency strategist at Bank of New York Mellon Corp. in London. ‘It shows you the market is looking for the slightest excuse to confirm what it wants to believe — at the moment the market wants to buy Dollar.’
‘Overall Q1 GDP growth in the UK was relatively soft. While some part of that represents ‘data noise’, such as in construction, the impression was there was also a deceleration in activity growth. Going forward we would expect some strengthening in performance, with the service sector regaining some traction, ‘stated analysts from UBS.
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate has fallen to a low of 18.2770 today.
South African Rand (ZAR) Exchange Rate Forecast to Dive versus the Euro after PPI Dropped
Producer Prices in South Africa dropped on both a monthly and annual basis in April, which caused the Rand to decline versus many of its peers. The softer-than-expected Producer Price report has rekindled speculation that the South African Reserve Bank (SARB) will be required to intervene in the market, a feeling exacerbated by recent labour market data which showed unemployment rose above 26%. The declination was also fuelled by the bullish US Dollar as demand for emerging-market currencies cooled significantly.
Adding to South Africa’s woes is continued issues with Eskom, the nation’s foremost energy provider. The flagging company is now being taken to court by the trade union Solidarity, which claims the company’s plan to reach its equity targets by 2020 would mean employment and promotions will be based on race and not on training or qualifications.
‘We’ve filed the court papers served it on Eskom, Minister of Labour as well as on NUM and Numsa being interested parties, and yes we seek to have a plan reviewed in its entirety,’ said the union’s Johan Kruger.
Pound Sterling to South African Rand (GBP/ZAR) Exchange Rate Forecast to Hold Gains ahead of Friday’s UK Confidence Data
With a complete absence of further domestic data publications to spark changes, the Pound Sterling to South African Rand (GBP/ZAR) exchange rate is likely to hold gains for the remainder of Thursday’s European session. Friday will see GBP/ZAR volatility with both British and South African reports due for publication.
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate advanced to a high of 18.6370 today.