The South African Reserve Bank has decided to keep interest rates on hold at 5.75% on Thursday. The result has seen the Rand fall against many of its competitors after the bank outlined concerns that economic growth outweighs inflation worries. The Pound, meanwhile, has enjoyed a gradual strengthening after the very last poll on Scottish independence showed the Unionists to have the lead.
The Pound Sterling to South African Rand exchange rate is currently trending in the region of 18.0940.
Sterling firmed up against many of its most traded currency peers on Wednesday as trader anxiety over the Scottish bid for independence cooled somewhat. Although the many polls have shown different results; the general consensus is that Scotland will vote against independence.
British data was mostly negative on Wednesday. Unemployment showed a positive declination from 6.4% to 6.2%, but average weekly wages only grew by 0.6% which is the coolest wage growth since comparable records were introduced in 2001. The wages data indicates a serious miscorrelation between earnings and inflation which has all but snubbed out the possibility of a first quarter rate hike in 2015.
Wednesday also saw the Bank of England publish the minutes from its most recent monetary policy meeting. The minutes showed that two of the nine policymakers voted against Governor Mark Carney’s stance on monetary policy. Sterling managed to make fractional gains against many of its peers following the publication.
Those invested in the South African Rand would have been pleased with the gains made off the back of an unforeseen rise in inflation. Although the rise to 6.4% takes inflation away from the South African Central Bank’s target of 3-6%, the rise fuelled speculation that the SARB would increase their benchmark interest rate in order to counteract inflation concerns.
The Pound Sterling to South African Rand exchange rate has hit a low of 17.8590.
Thursday’s British economic data has printed relatively poorly. Year-on-year Retail Sales improved upon the previous figure of 3.3% with the actual data printing at 3.9%, but this was still below the market consensus of 4.8%. Retail Sales including Auto also failed to reach the forecast figure, but once again improved upon the previous figure with the actual data reaching 3.9%.
Now that the very last opinion poll on Scottish independence has been published trader anxieties have abated somewhat. The poll showed that the Unionists had taken a 6 point lead to 53%. Scotland’s First Minister Alex Salmond seems undeterred by the poll stating; ‘We are in the hands of the people of Scotland and there is no safer place to be than in the hands of the Scottish people who can take their own future into their own hands’.
The South African Reserve Bank kept its benchmark interest rate unchanged at 5.75% on Thursday despite expectations that Wednesday’s inflation data would prompt a hike. Jeffrey Schultz, an economist at BNP Paribas Cadiz Securities in Johannesburg, said; ‘The Reserve Bank is unlikely to be too concerned at this juncture that demand-driven inflationary pressures are getting out of hand’.
The Pound Sterling to South African Rand exchange rate has reached a high today of 18.1880.
UPDATE
The GBP/ZAR exchange rate plunged by 0.6% on Friday after initially surging to a high of 18.3420 on the back of the Scottish unionists’ referendum victory.
Next week the Pound Sterling to South African Rand exchange rate could be effected by South Africa’s Producer Price Index.
There is little UK news to be aware of, but investors will be paying attention to the British government’s plans for the United Kingdom now Scotland has opted to remain a part of it.
