The Pound sterling (GBP) exchange rate climbed away from its worst levels against the South African rand (ZAR) by the end of last week, and could continue to advance if next week’s UK data impresses markets.
GBP/ZAR began last week around the level of 19.2602 and trended downward for most of the week, hitting a weekly low of 18.4974 on Thursday before recovering slightly before the close of the session.
In Monday's news, even though the British Chambers of Commerce lowered its forecasts for the UK economy and issued a fresh warning that the Brexit vote could weigh on sentiment for some time to come this did not significantly dent the sterling-rand conversion.
With the US Dollar on bullish form and base metal prices slumping there has been little reason for traders to buy into the higher-risk Rand at the start of the week.
While the South African second quarter current account deficit narrowed further than forecast this was not enough to particularly bolster the appeal of the Rand.
Even so, with investors disappointed by the UK Consumer Price Index report for August and a lack of inflationary uptick, the GBP/ZAR exchange rate slipped.
Latest Pound/Rand Exchange Rates
On Friday the Pound to British Pound exchange rate (GBP/GBP) converts at 1
FX markets see the pound vs pound exchange rate converting at 1.
The pound conversion rate (against euro) is quoted at 1.166 EUR/GBP.
The pound conversion rate (against us dollar) is quoted at 1.251 USD/GBP.
Please note: the FX rates above, updated 26th Apr 2024, will have a commission applied by your typical high street bank. Currency brokers specialise in these type of foreign currency transactions and can save you up to 5% on international payments compared to the banks.
British Pound (GBP) Recovers vs Rand (ZAR) on South African Growth News
The Pound to Rand (GBP/ZAR) exchange rate plummeted earlier in the week, experiencing especially sharp drops on Tuesday as the Rand capitalised on a weak Sterling following the publication of South Africa’s Q2 Gross Domestic Product (GDP) report.
While the Pound began the week on a solid note thanks to optimistic UK stats, it weakened as Brexit concerns set in again and investors saw GBP’s rally as being overvalued.
The South African Rand, on the other hand, surged across the board when it was confirmed that South Africa had avoided recession in Q2 2016, with Q1’s GDP figure of 1.2% being followed up by a sturdy 3.3%. This brought the yearly score up from -0.1% to 0.6%.
However, as markets piled into the Rand, the risky emerging market currency was inevitably sold from its highest levels as investors indulged in profit taking.
Increased demand for currencies like the Euro and US Dollar on Thursday also weakened the Rand, allowing Sterling to claw back some of its losses by the end of the week.
August Consumer Price Report and September BoE Meeting This Week
Next week is set to be another relatively important one for the British economy, with key figures like August’s Consumer Price Index (CPI) scores set for publication on Tuesday and July’s 3-month unemployment rate due on Wednesday
Thursday will also see the publication of Britain’s August jobless claims report, which could contrast July’s employment stats if the dire-July rebound-August trend continues.
Most vitally, the Bank of England (BoE) will be holding its September policy decision on Thursday afternoon.
As the first meeting since August’s historically aggressive stimulus package was introduced, Sterling could weaken in anticipation of this meeting as markets speculate on further easing.
Given the comments made by BoE Governor Mark Carney last week, that stimulus measures had helped the UK economy to rebound in August, investors may avoid betting on further stimulus just yet.
South African Rand (ZAR) Exchange Rates to Face Retail Sales Figures This Week
The South African Rand (ZAR) is likely to spend the next week readjusting from last week’s surge, and as a result could see continued selloffs – particularly if the US Dollar continues to strengthen.
However, there are a few data opportunities for the Rand to hold its ground.
Tuesday sees the publication of Q2’s currency account figures, which some forecast will lighten from ZAR-211B to ZAR-189.4b.
Wednesday will follow with July’s South African retail sales scores, which are expected to see modest improvement. June’s score of -2% is expected to be followed by 1.6%, and the yearly score is expected to slip from 1.7% to 1.5%.
Overall, the Rand has little in the way of immediately obvious chances to advance in the coming week – that would depend on the risk appetite of markets.
If the US Dollar weakens again, this will be the best opportunity for investors to continue last week’s emerging market currency rally.
GBP/ZAR Forecast to Recover Next Week
Currently, it seems likely that the Rand will lack the inspiration to drag the Pound lower, and August data may continue to inspire investors to buy into Pound Sterling (GBP) exchange rates.
As August’s PMI figures all beat expectations, markets will be eyeing next week’s UK inflation figures for post-Brexit vote surges in consumer prices.
Higher inflation could cause obstacles for the Bank of England (BoE) but Sterling is likely to remain on an upward trend unless the BoE takes a dovish tone in its meeting next Thursday.