The Pound (GBP) to South African Rand (ZAR) exchange rate strengthened on Wednesday following the publication of positive UK employment data but the currency pair is forecast to experience volatility on Thursday due to the Scottish Referendum vote.
Data released by the Office for National Statistics (ONS) showed that unemployment in the UK fell to its lowest level for six years in July as the overall unemployment rate fell from the preceding months 6.4% figure to 6.2%.
‘The UK is seeing a job-rich recovery driven by a boom in private-sector hiring and self-employment. Wages remain the missing link in this recovery. But with job vacancies up by 25% in the last year and unemployment at a six-year low, we see earnings heading up from here,’ said Ian Stewart, chief economist at Deloitte.
Data also showed that wage growth also increased putting some pressure upon the Bank of England to raise interest rates. BoE Governor Mark Carney recently said that weak wage growth has been one of the major causes for maintaining interest rates at record lows.
Also supporting the Pound was a report, which showed that the number of UK citizens claiming unemployment benefits fell by 37,200 in August, beating economist expectations for a fall of 30,000. The total number of claimants dropped below 1 million for the first time since September 2008.
The South African Rand meanwhile received some support after data showed that inflation increased more than forecast in August.
Statistics SA figures showed on Wednesday that Inflation as measured by the consumer price index (CPI) rose by 6.4% annually in August from 6.3% in July as elevated food prices weighed. This was against market consensus of 6.2%. Food inflation was higher, despite moderating global food prices. CPI is targeted within a 3%-6% range.
The data did little to convince economists to change their expectations that it would prompt the South African Central Bank to raise interest rates.
‘In terms of the detail of the CPI print, there isn’t too much that concerns us. Nor is there sufficient evidence to change our view that the Reserve Bank will most likely keep interest rates on hold,’ said Razi Khan, head of African research at Standard Chartered.
Pound Sterling to South African Rand Exchange Rate Forecast
All eyes will be fixed on the Scottish Referendum on Thursday and with the outcome too close; to call we can expect the Pound to experience choppy trading until the result is known. A victory for the Yes campaign will likely send the Pound tumbling whilst if the pro-union No side wins the Pound is likely to make strong gains.
The markets seem to be favouring a win for the No vote as are the UK bookies with some already paying out to those who betted on such an outcome.
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,17.8149 ,
Euro,,South African Rand,14.6717 ,
US Dollar,,South African Rand,10.9175 ,
Australian Dollar,,South African Rand,9.8987 ,
[/table]
