The Pound Sterling to US Dollar (GBP/USD) exchange rate edged lower by around -0.13% whilst the Pound Sterling to South African Rand (GBP/ZAR) exchange rate declined by around -0.42%.
Britain’s Prime Minister David Cameron will be attending a European Union summit later on Thursday, in which he will be presenting a proposal for reforming the relationship between the UK and the European Union. Should talks stumble at this first hurdle, the Pound is likely to dive versus its peers. British data also failed to meet with expectations, which has caused the Pound to soften against its peers.
Those trading with the US Dollar will also be interested in the EU summit as Greek officials attempt to secure aid. If talks break down again, as has happened frequently in the past five-months, trader risk-aversion will see heightened demand for the ‘Greenback’. US labour market data, due for publication later on Thursday afternoon, is very likely to provoke Dollar volatility.
The South African Rand advanced versus many of its rivals after May’s producer price data bettered estimates. Additional appreciation can be linked to Eskom, South Africa’s largest energy provider, being promised a large cash injection from the National Assembly to improve facilities in order to cope with rising demand.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5694.
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate is currently trending in the region of 18.9970.
Pound Sterling (GBP) Exchange Rate Forecast to Edge Lower against the US Dollar after Retail Sales Ease
British Retail Sales growth cooled in June after having registered five-month high sales in May. The Confederation of British Industry’s (CBI) Reported Sales came in at 29 in June; missing the median market forecast of 35. The result was still above the average for the time of year, however. ‘Summer is a time of optimism for retailers and this year is no different. Even though growth slowed slightly this month, retailers are not letting that subdue their hopes for the season,’ said Barry Williams, a senior executive at Wal-Mart’s Asda unit and chairman of the CBI survey.
Sterling traders are awaiting news from the EU summit in which Cameron prepares to persuade EU officials to reform the relationship with the UK. Cameron’s aiming to offer British citizens a better deal and hoping that a reformed membership will ease British concerns. Markets have already reacted poorly to the prospect of an EU referendum and so analysts will be hoping Cameron is successful so as to avoid bolstering arguments presented by Euro-sceptics.
US Dollar (USD) Exchange Rate Forecast to Tick Higher against the British Asset on Safe-Haven Demand
As speculation mounts that Greece will fail to secure aid given the reluctance of Syriza to adopt further austerity measures which they believe will cripple the Greek people, trader risk-aversion is amplifying. This has seen heightened demand for the US Dollar thanks to its safe-haven qualities.
US labour market data, due for publication later on Thursday afternoon, will be of significance to those invested in the ‘Buck’ (USD). After Federal Reserve Governor Jerome Powell speculated that the Federal Open Market Committee (FOMC) would hike the cash rate twice within 2015, many traders feel that the labour market will dictate the timing of a liftoff.
South African Rand (ZAR) Exchange Rate Forecast to Advance against the ‘Greenback’ after Eskom gets Bailout Green Light
After months of rolling blackouts and worker strikes, Eskom has been granted financial aid in order to revive tired machinery and get production back on point. Finance Minister Nhlanhla Nene said yesterday that the money would be recouped through the sale of non-core assets, reassuring Parliament that the details of the assets to be sold to raise the funds would be public and transparent.
‘I can confirm to you members it will be non-strategic assets. Before the end of June you will know which those assets are,’ Nene said. ‘I want to assure this House that the decision this House is about to take is the correct decision,’ he added.
The Rand also appreciated on Thursday thanks to better-than-expected producer prices. May’s Producer Price Index met with the median market forecast 3.6% on the year. On the month, May’s PPI came in at 0.8%; bettering the market consensus of 0.3%.
Pound Sterling to US Dollar (GBP/USD) and South African Rand (GBP/ZAR) Exchange Rate Forecast to Hold Losses before EU Summit Concludes
News from the EU summit will impact all three currencies. Sterling traders await Cameron’s proposal while US Dollar and South African Rand traders will be awaiting news about Greece to gauge market sentiment. Therefore, the GBP/USD and GBP/ZAR exchange rates are likely to hold losses ahead of the summit.
Friday’s economic docket is particularly sparse so trade is likely to be dominated by market sentiment and geopolitics. For those invested in the US Dollar, however, University of Michigan Confidence and the Baker Hughes US Rig Count have the potential to provoke volatility.
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within the range of 1.5673 – 1.5725 today.
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate was trending within the region of 18.9520 – 19.0810.
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