The Pound Sterling to South African Rand (GBP/ZAR) exchange rate strengthened by around 0.40% on Monday.
After South African data showed that manufacturing slowed, the Rand softened versus many of its most traded rivals. A larger declination was avoided, however, thanks to emerging market assets deriving support from a weaker US Dollar.
The Pound Sterling, meanwhile, is generally trending lower versus its major peers after disappointing data last week indicated that the UK’s economic recovery is losing momentum.
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate is currently trending in the region of 17.4650.
Pound Sterling (GBP) Exchange Rate Softens on Rate Delay
With British factory output slowing and services growth below expected levels, traders are speculating that the Bank of England (BOE) will delay a rate hike for the foreseeable future. The growing policy divergence between the major central banks has also added to the Pound’s decline.
‘On balance, there is further evidence that UK growth is slowing as we head towards the general election,’ said Simon Wells, chief UK economist at HSBC.
In addition to policy disparity causing a Sterling downtrend, domestic data printed disappointingly on Monday. The Lloyds Employment Confidence Index softened from 1 to -2 in December.
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate dropped to a low today of 17.3260.
South African Rand (ZAR) Exchange Rate Declines on Manufacturing Production
In the wake of disappointing domestic data, the South African Rand softened against the majority of its most traded peers. Yearly Manufacturing Production declined beyond the median market forecast of a drop from 2.2% to 1.56%, with the actual result falling to -1.3%. On a monthly basis, manufacturing production cooled from 0.5% to -2.1%, despite the market consensus of a rise to 0.96%.
However, the Rand’s decline was limited as recent North American data promoted a sense that the Fed is still a way off normalising monetary policy.
Pound Sterling to South African Rand (GBP/ZAR) Exchange Rate Forecast to Gradually Advance
With a lack of domestic data to curb the trend, the Pound Sterling to South African Rand (GBP/ZAR) exchange rate is likely to continue trending higher, albeit minimally. There is the potential for volatility, however, depending on how US data prints.
The Pound Sterling to South African Rand (GBP/ZAR) exchange rate reached a high today of 17.4380.
