Pound Sterling South African Rand (GBP/ZAR) Exchange Rate Muted as ZA Inflation Rebounds from 15-Year Low
The Pound Sterling South African Rand (GBP/ZAR) exchange rate remained flat on Wednesday morning. This left the pairing trading at around R21.3495.
The South African Rand remained under pressure despite data revealing headline inflation picked up in June after tumbling to a 15-year low in May.
Data from Statistics South Africa showed inflation rose from May’s 2.1% to 2.2% in June. Month-on-month consumer prices increased from -0.6% to 0.5%.
However, traders remained cautious as attention turned back to the US Federal Reserve’s interest rate decision and policy statement.
Markets are expecting the US central bank to take a dovish stance and reassure that it will commit to endless stimulus.
Pound (GBP) Flat as BoE Shows Mortgage Approvals Bounce Back
Meanwhile, Sterling remained muted despite data from the Bank of England (BoE) showing mortgage approvals bounced back in June.
Data revealed that mortgage lending recovered after May’s record low and households slowed the pace at which they repaid.
According to Simon Gammon, managing partner at the property firm Knight Frank’s finance division, the housing market has been gathering pace. He noted:
‘The Bank of England data shows the beginning of a rebound that all of our indicators suggest is gathering pace. In fact July is on course to be our busiest month on record.
‘There are many factors fuelling the post-lockdown rebound spanning the recent cut to stamp duty, successive cuts to interest rates, currency fluctuations and tax changes, and as a result everybody from first time buyers to billionaires are active in the property market.
‘How long this surge lasts will depend on the development of the pandemic, and the effect on employment of the wind up of government support schemes during the autumn, but it’s clear interest rates are going to remain at or close to record lows for the foreseeable.’
Pound South African Rand Outlook: Fed and UK House Prices in Focus
Looking ahead to this evening, all eyes will be on the US Federal Reserve as the bank reveals its interest rate decision and policy statement.
The South African Rand (ZAR) could struggle to make significant gains against the Pound (GBP) if the Fed are overly dovish and risk appetite slumps further.
Meanwhile, Sterling could slide if Thursday’s UK housing prices data shows prices have slumped more than expected in July.
Weak housing prices will weigh on the British currency and leave the Pound South African Rand (GBP/ZAR) exchange rate flat.