The GBP to ZAR rate was weaker last week as Brexit jitters took hold of Sterling investors once more, while the South African Rand benefited from higher risk-sentiment.
At the time of writing, the British Pound to Rand exchange rate was trading -0.54 per cent lower on the day at just 17.75. Will this slump continue against the ZAR?
The sterling-rand continued to trend near Monday’s lows on Monday afternoon, but was still able to hold away from last week’s lowest levels.
The Rand has trended relatively sturdily since last week’s South African Reserve Bank (SARB) meeting saw interest rates held frozen at 7%.
GBP/ZAR began last week trending near a weekly best of 18.5793, but fell in value rather consistently since then.
The pair rebounded from a monthly low of 17.4900 on Thursday, but struggled to recover back to the level of 18 GBP/ZAR on Friday.
Today’s Pound/Rand exchange rates:
On Thursday the Pound to British Pound exchange rate (GBP/GBP) converts at 1
The pound conversion rate (against pound) is quoted at 1 GBP/GBP.
At time of writing the pound to euro exchange rate is quoted at 1.167.
FX markets see the pound vs us dollar exchange rate converting at 1.252.
Please note: the FX rates above, updated 25th 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.
Pound (GBP) Weakens Against Rand (ZAR) on Brexit Concerns
Last week’s session was a gloomy one for the Pound, as the currency lacked in supportive data and as a result spent most of the week limply trending lower and lower.
The currency was given a brief boost on Thursday thanks to hawkish comments made by Bank of England (BoE) policymaker Kristin Forbes.
As part of a speech on the economic effects of Britain’s Brexit vote thus far, Forbes argued that there was not yet a case for further economic easing from the BoE as the UK’s economy had been more resilient-than-expected since the Brexit vote.
However, Sterling’s shift in sentiment didn’t last. The currency was sold off on Friday morning as investors reacted to indications from Britain’s foreign secretary, Boris Johnson, that formal Brexit talks would likely begin in early 2017.
On the other hand, the South African Rand had yet another week of strong trade thanks to a disappointing interest rate decision from the
Federal Reserve. Weakness in the US Dollar led to an increase in demand for riskier currencies, such as the Rand as an emerging market currency.
News that South Africa’s inflation slipped slightly in August didn’t undermine the Rand much either, as results came in-line with analyst predictions.
UK Growth Stats at End of Week
Sterling will have a little more advance potential in the coming week due to a comparatively more-populated economic calendar.
Monday will see the publication of the BBA’s August house loans report, followed by Nationwide’s September house prices figures on Wednesday.
As some of Britain’s first September stats, Nationwide’s report could prove influential.
August mortgage approvals will be published on Thursday, but Friday’s session will likely be the most influential.
GfK will be publishing its September consumer confidence figures, followed by Britain’s final Q2 Gross Domestic Product (GDP) scores later in the morning.
If Q2 growth meets preliminary results of 0.6% month-on-month and 2.2% year-on-year, this could help give Sterling some firmer footing to trend on.
South African Rand (ZAR) Exchange Rates Forecast to Include Consumer Confidence and Trade Balance Ahead
The Rand will likely continue trending in relation to market risk-sentiment for the first half of next week, as South Africa’s economic calendar is relatively barren until Thursday.
South Africa’s August PPI results will be published on Thursday morning, and is expected to slow from 0.8% to 0.3% month-on-month but improve from 7.4% to 7.7% year-on-year.
A bigger slew of influential South African datasets will be published throughout Friday however, including Q3 consumer confidence and August trade balance figures.
Consumer confidence is expected to lighten slightly from -11 to -10, but a bigger-than-expected improvement could boost the Rand. The Rand could also be bolstered if South Africa’s surplus improves from ZAR5.22b to ZAR6.6b in August as projected.
GBP/ZAR Forecast: Risk Sentiment and Brexit Jitters to Factor into Value
Last week, UK markets began fresh speculation on when the formal Brexit process would begin and how a post-Brexit economy would fare without access to the European Union’s single market.
Sterling could weaken further if more investors begin to fear that Britain’s access to the single market is unlikely to last after the Brexit vote, but more optimistic economic forecasts and solid September data could give the Pound a good foothold.
As for the Rand, sentiment towards the emerging-market currency is likely to remain strong so long as risk-correlated investments continue to be in demand in the forex market.
Risky currencies are likely to remain a little stronger for now even if US data impresses, as US markets will become increasingly anxious as November’s US Presidential election approaches.