The Pound Sterling to South African Rand (GBP/ZAR) exchange rate was still trending in a stronger position on Friday amid reduced Scottish referendum fears and South Africa’s disappointing domestic backdrop.
The Rand was also trending in the region of a seven-month low against the US Dollar (USD/ZAR) as the North American currency enjoyed a bullish relationship with most of its higher-risk relations.
Although ongoing geopolitical tensions in Ukraine and Russia have had an impact on the ‘Greenback’ over the last few days, the expectation that the Federal Reserve might bring forward its timeline for increasing interest rates has lent the US Dollar support.
The Rand’s decline against both the Pound and US Dollar was also due to less-than-impressive domestic figures, including the news that South Africa’s current account deficit widened while manufacturing production slumped to a five-year low.
An unexpected slowing in China’s consumer prices piled additional pressure on the commodity-driven Rand.
In the opinion of some industry experts, the Rand could soften further against the US Dollar in the days ahead. According to currency trader Oliver Alwar; ‘A move to the next Dollar resistance around 11.0950 and then 11.12/13 could develop rapidly. It is the end of a volatile week though, so there may be some position squaring.’
The end of week strength in the Pound to Rand exchange rate was also due to the news that the latest Scottish referendum poll, compiled by YouGov, put unionists back in the lead.
The Pound Sterling to South African Rand exchange rate hit a high of 17.8820.
That being said, while the Pound is trending higher against the Rand, it is struggling to exert itself against several of its other peers. When commenting on the Pound’s performance in the face of the Scottish uncertainty, industry expert James Stanton noted; ‘It is, without question, the uncertainty over the outcome of Scotland’s vote for independence that is fuelling the current flight out of Sterling. This is uncharted territory and, as such, investors are uncertain about the longer-term economic outlook and financial framework of an independent Scotland and a split union. Therefore they are hedging by splitting asset classes, including currencies. This is a typical and understandable response in times of uncertainty. However, I expect that this trend will diminish after next Thursday’s vote.’
Pound to South African Rand (GBP/ZAR) Exchange Rate Forecast
Next week the Pound Sterling to South African Rand exchange rate can be expected to experience considerable volatility as a result of a run of significant South African economic reports and some major UK developments.
The UK’s Bank of England meeting minutes and employment figures will be key, as will the highly anticipated Scottish referendum.
However, investors with an interest in the Pound to Rand (GBP/ZAR) exchange rate will also be focusing on South Africa’s inflation rate report, retail sales figures and the South African Reserve Bank’s interest rate decision. Disappointing fundamentals for South Africa could drive the Rand lower against peers like the US Dollar and Pound.
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,17.8449,
Euro,,South African Rand,14.1917,
US Dollar,,South African Rand,10.9800,
Australian Dollar,,South African Rand,9.9423,
New Zealand Dollar,,South African Rand,8.9764,
Canadian Dollar,,South African Rand,9.9436,
[/table]
