The Pound Sterling to South African Rand (GBP/ZAR) exchange rate rallied on Wednesday as the Bank of England policy meeting minutes revealed divided opinions on the timeline for increasing interest rates and several major South African banks had their ratings downgraded by Moody’s.
The Rand also slipped to a one-week low against the US Dollar.
However, mixed UK retail sales figures left Sterling struggling and meant that the Rand was able to strengthen against its British peer on Thursday.
Retail sales including autos rose by just 0.1% in July from June.
A month-on-month increase of 0.4% had been anticipated.
This was the latest in a series of signs that the UK’s consumer-led recovery might be losing momentum.
Spending in food stores dropped considerably, with a year-on-year slide of 1.3% being recorded by the Office for National Statistics.
In the opinion of one industry expert; ‘Many consumers are yet to feel the benefits of the economic recovery and are reluctant to let go of their recessionary behaviours, particularly when shopping for food.’
Separate UK data showed that the nation’s government finances posted a deficit in July for the second consecutive year, although the deficit was slightly lower than in the same period of the previous year.
The GBP to ZAR exchange rate hit a low of 17.6480.
The Euro to Rand exchange rate also eased lower during the European session as investors reacted to the news that growth in the Eurozone’s Manufacturing and Services sectors slowed by more than anticipated in August.
While the measures remained above the 50 mark separating growth from contraction, their combined decline saw the Composite measure for the 18-nation currency bloc ease from 53.8 to 52.8. The measure had been expected to come in at 53.4.
However, Markit economist Rob Dobson did highlight the brighter aspects of the data. He commented; ‘There are some positive points coming out of the national data […] with Germany recording solid growth and France stabilising following a brief period of contraction. Further progress was also made outside of the big-two economists, although signs that output and new order growth slowed sharply over the month adds a cautionary note for the outlook in the ‘periphery’.
While the Euro was slightly softer against the Rand after the data was published, the common currency was trending slightly higher against peers like the Pound and US Dollar.
Additionally, the Rand was holding steady against the US Dollar on Thursday having finally paused in its recent run of declines, although this situation could change if today’s US reports print positively.
Pound to South African Rand Forecast
A lack of economic reports for both South Africa and the UK is likely to keep the Pound to South African Rand exchange rate trending in a narrow range tomorrow.
Investors with an interest in the Rand will now start looking ahead to next week’s reports for South Africa, including second quarter Gross Domestic Product, July’s Producer Price Index and Balance of Trade figures for July.
The Pound Sterling to South African Rand exchange rate hit a high of 17.7980.
GBP/ZAR Exchange Rate Holds Steady, Euro to Rand Trending Higher
Yesterday the Pound to South African Rand exchange rate softened after less-than-impressive UK retail sales growth caused traders to pull away from Sterling. The Euro to Rand exchange rate also declined after a mix-bag of European domestic data results.
Today there is nothing by way of domestic data for the Pound or the South African Rand, so expect the exchange rate to hold steady.
The Euro has made slight gains today ahead of tonight’s Jackson Hole symposium because many traders are engaging in profit taking ahead of the gathering. If the European Central Bank President Mario Draghi gives a better sense of timing for an interest rate hike, and that hike is either sooner or later than anticipated, traders are likely to pull away from the Euro.
South African Rand (ZAR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,South African Rand,17.7557,
Euro,,South African Rand,14.2051,
US Dollar,,South African Rand,10.7054,
Australian Dollar,,South African Rand,9.9294,
New Zealand Dollar,,South African Rand,8.9655,
Canadian Dollar,,South African Rand,9.7546,
[/table]
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